Gold prices have risen in 5 waves from the 1,226 lows to 1,258. The decline is in 3 waves. The bigger move from 1,360, as we mentioned in previous analysis, is a complete 5 wave pattern. So now it is time for a bigger upward corrective move.

So the gold prices are expected to move upwards to complete the third part of the upward correction. The first part was 1,226-1,258 and the second part was from 1,258 to 1,233. The next move should be an upward impulsive wave towards 1,260-90. Confirmation for this will come once the prices break above 1,255-58.

If, however, the prices don't break the resistance at 1,256-58, but fall lower towards new lows, we will have to change our wave count. For now, the bulls should use 1,226 as stop and look for a move towards 1,260-90. Bears should stay clear for now as there is an increased chance that the prices will move towards the broken neckline to back test it. The daily chart above shows that prices are trading above the support levels at 1,200-1,220 and this could produce a counter trend bounce towards 1,260-1,300.