Hot Inflation Could Not Break Gold: Gary Wagner Says Charts Signal Rebound Above $5000
In an interview with Kitco News, technical analyst Gary Wagner of TheGoldForecast.com examined the sharp gold price reaction to a hot inflation report and outlined why the charts point to a potential bottom and a recovery above 5000 dollars by year end.
Gold dropped as much as 82 dollars after the Consumer Price Index release, then recovered nearly the entire loss the following day. Wagner described this as the kind of snap back that often marks a bottom. “We have a simple two day Japanese candlestick pattern called Buying Engulfing,” he said. The pattern appears after a clear downtrend when a red candle is followed by a green candle that opens at or below the prior close and closes at or above the prior open. Confirmation requires a subsequent green candle with a higher low, higher high, higher open, and higher close.
Wagner, who entered the markets in 1983 and co authored a book on Japanese candlestick charts, noted that gold peaked near $5600 dollars earlier in the year before correcting for several months. Unlike the multi year decline after 2011, this pullback has been shorter. Support has repeatedly appeared just above 4100 dollars, where traders have bought the dip. “They saw value there, and that’s what was driving him back up.”
On Elliott Wave analysis, Wagner explained that the correction from the January high has been complex rather than a simple ABC pattern. Impulse waves 1, 3, and 5 move in the direction of the larger trend, while waves 2 and 4 are corrective. “The golden rule of the third wave states that the third wave cannot be the shortest of the impulse waves.”
He also noted that a correction cannot break below the low established earlier in the sequence. These rules lead him to conclude that gold can finish the year above 5000 dollars per ounce, though he does not expect new record highs immediately. A fourth wave correction would follow, with a fifth wave potentially carrying prices higher into the first or second quarter of 2027.
Silver tested the 56 dollar floor Wagner identified a month earlier, briefly dipping to 55.36 before recovering more than 2 percent. He views 56 dollars as absolute initial support and sees potential for a move toward the 67 to 68 dollar area, which represents a 23 percent correction level from prior highs, with major resistance near 73 dollars. “Silver is the poor man’s gold. It has all kinds of powerful applications in technology, electrical circuits, and everything else. Therefore, it will always be used.”
Wagner places less emphasis on the gold silver ratio than some analysts, noting he has seen it both much higher and much lower. He continues to stack silver and holds a preference for certain coins, but he maintains that gold remains the definitive precious metal. “I’ve always preferred gold. Gold is a precious metal whose pricing is more difficult to predict, but silver is much more volatile.”
A rising U.S. dollar and a 10 year Treasury yield near its highest level since 2002 represent the primary headwinds for the metals. Wagner also identified a price void forming in crude oil that could influence broader commodity trends. He stressed that fundamental events can invalidate any technical model, but the current candlestick and wave structure supports the view that the recent weakness is a pause rather than the start of a sustained decline.
Wagner’s year end model and the bullish engulfing pattern on the daily gold chart form the core of his outlook that gold can reclaim levels above $5000 dollars if the confirmation candle materializes and support near $4100 holds.
