Headlines Are Driving Gold Lower While Elliot Wave Count Could Be Bullish in Next Impulse Phase

Front-month COMEX gold futures (GC1) settled Friday at $4,172.1, down $35.7, or 0.85% on the day, and roughly 3% lower on the week. It was the second straight weekly loss. Spot gold had already lost more than 2% for the week before Friday's payrolls report, and September as a whole saw a decline of more than 6% that snapped a two-month winning streak. The week was another reminder that gold is trading as a rates and oil story rather than as a safe-haven story, and Friday's price action showed how fragile any relief rally remains.

Monday set the tone. Gold fell about 3%, with spot touching $4,111, its lowest since early August, as oil climbed on a stalemate in US-Iran talks over the Strait of Hormuz and the benchmark 10-year Treasury yield reached its highest level since 2007. Higher crude is currently feeding inflation worries instead of lifting gold as a geopolitical hedge, and it pushed the odds of a second consecutive Fed hike in October to about 70%. The central bank raised its target range to 3.75% to 4.00% earlier in September, its first increase in three years. Gold-backed ETFs shed 1.6 tonnes the prior week and Chinese premiums had slipped to zero ahead of the week’s long holiday starting on the first of October, so fund and physical demand offered little cushion. Prices bounced on Tuesday after New York Fed President John Williams said there was no need for urgency on further hikes, and Wednesday's inflation data cut the October hike probability to roughly 37% from 51%. Gold still could not build on that relief, because Treasury yields climbed to their highest levels in nearly 25 years on Thursday and the dollar headed for a weekly gain .

Friday's jobs report produced the sharpest reversal of the week. September nonfarm payrolls rose only 29,000 against a Reuters consensus of 90,000, and August was revised down to 133,000 from 162,000. The 10-year yield slipped toward 5.2% and the odds of an October hike collapsed to about 14% from roughly 70% earlier in the week. Spot gold jumped more than 1% to around $4,220 and futures ran to a high of $4,259.0. The rally did not hold. Economists blamed seasonal adjustment distortions from the late Labor Day holiday and saw no sign of broad layoffs, jobless claims are near 57-year lows, and a December hike was still priced near 79% before the report. Futures sold off to a low of $4,153.8 and closed at $4,172.1, below both the open of $4,204.6 and Thursday's close of $4,207.8.

The daily chart places that reversal inside the larger correction from the January high. Measured from the $2,937.6 low to the $5,752.5 peak, gold held the 0.618% retracement at $4,012.9 in July, rebounded to roughly $4,750, just above the 0.382% retracement at $4,677.2, and was rejected there in August. Price has since given back about three-quarters of that rally and sits roughly 160 points above the July low. Friday's candle is a bearish reversal bar: a spike on a bullish catalyst followed by a close in the lower fifth of the day's range and below the open. When a market cannot hold gains on supportive news, it often signals that overhead supply is heavier than the headline suggests. The $4,153.8 low also stopped almost exactly at the lower edge of the shaded zone near $4,150, which makes that level the first one to watch on Monday.

On the Elliott wave side, our chart has on it both an algorithmic based count in black and a hand drawn alternative drawn in dark green. The Elliot Wave Lux Algo on Trading view produced the automated count however, this count is technically still valid if you are going of of the wicks but has a borderline wave 3 at the larger degree. Because wave 3 comes out roughly equal to wave 1 and may be the shortest, which would violate the rule that wave 3 can never be the shortest impulse wave. An alternative count avoids that problem. It treats the December 2024 low at $2,937.6 as the origin, the April 2025 high near $3,795 as wave 1, the August 2025 low near $3,540 as wave 2, and the run to $5,752.5 as an extended wave 3 that is about 2.6x the length of wave 1. Under that reading the decline since January is wave 4. The July low at $4,013 retraced 78.6% of wave 3, which is deep but legal, since the hard rule is only that wave 4 may not overlap the price territory of wave 1. That puts the invalidation level at $3,795, and a decisive break below it would end the count. So plainly put there is a case to be made for gold still well within a larger bullish structure.

The degree matters here, a Super Cycle typically takes decades to complete and gold over that sort of time frame is unarguably in a bull cycle. A simple cycle in Elliot Wave spans multiple months to multiple years with waves that span at least several months in time. It is at this degree that traders actually pay attention to and we present an alternative model in which gold is still within a bullish phase, currently still in its wave 4 or even having started its wave 5. For gold’s price action to invalidate this count would have to drift below roughly $3,800.

The structure of wave 4 is the open question. If the July low completed it, the August rally to $4,750 was the first leg of wave 5 and the current pullback needs to hold above $4,013 to keep that case alive. If wave 4 is still unfolding as a double zigzag, Friday's failed rally fits a final leg lower that has not yet run its course, with $4,013 and then $3,795 as the downside reference points. Resistance sits at Friday's $4,259 high, then the upper end of September's range near $4,500, and then the $4,677 retracement. Support is Friday's $4,153.8 low, then $4,013 and $3,795. The September FOMC minutes, due next week, and a steady flow of Fed speakers lead into the October 27 to 28 meeting, so oil and Iran headlines should remain the swing factor. Until yields and crude ease, rallies into the $4,250 to $4,500 zone look more corrective than the start of a new advance.