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# Gold Update 4

Our last intra-day update of Christmas Eve was looking for the end of the
impulse wave that had begun on the 21^{st} December. The graph below
left the possibility that the wave labelled "5?" may be ending soon or would
undergo an extension. We also stated the following based on Fibonacci ratios
for irregular corrections:

*"As we said, the "a" wave was $16 and the "b" wave was $20, which gives
a ratio of 1.25, so we are right on target again with the Fibonacci ratios.
The c/a ratio of 1.62 or 2.62 suggests a final "c" top of $516 or $532."*

In other words, the (A) and (B) waves below fulfilled the ratio of 1.25. But what about the C/A ratio price targets suggested above?

Looking at the updated chart below, we see that the fifth wave did indeed
extend from the 27^{th} to the 29^{th} and overshot the $516 target by a couple
of dollars but then began to oscillate below resistance of about $517 since
the 29^{th} December. We have also annotated that fifth wave with its own 1-2-3-4-5
sub divisions.

Admittedly, we were on the cautious side on whether gold would rise to this $516 level, but it did it in short measure! So where do we stand now?

The B wave has done enough to complete with the (A)-(B)-(C) shown above, but
the corrective pattern traced out from the 29^{th} to the 30^{th} doesn't
really tell us much. Is it a correction before a bigger push upwards or is
it a correction of the initial drop we see in the graph from the possible completion
of the (C) wave?

The answer is of course we don't know. But if the price breaks significantly up above $518 then it looks like the price is going to push onto to our next target of $532. Any price break staying above $510 doesn't tell us much at all at this stage.

Of course, an impulse wave could also signify the restart of the bull after
the pullback of 12^{th} December. At this point we're not convinced
the overall correction is over.

For now we sit back and let the markets do the talking. May we wish all readers a prosperous and fulfilling 2006!

Roland Watson writes the investment newsletter *The New Era Investor* that
can be purchased for an annual subscription of $99. To view a sample copy of
the New Era Investor newsletter, please go to www.newerainvestor.com and
click on the *"View Sample Issue Here"* link to the right.

Comments are invited by emailing the author at newerainvestor@yahoo.co.uk