Gold has retreated below a critical resistance zone ahead of today’s US employment data. The following Gold Elliott wave analysis looks at what could happen next.
December 06, 2019 | AtoZ Markets – The general market mood has stabilized in the second part of the week after conflicting trade headlines. Gold is retreating from the 1480-1485 resistance zone. An intraday support level is building at 1471. We will have to see whether the price will breach below 1471 to continue the long term bearish correction or it will rally to retest the resistance zone. Gold is closing the week on the high after spiking to its highest price in 4 weeks. In November so far, the commodity has gained 1.48% from about 2% recorded earlier in the week. The market’s focus will now be on today’s employment data from the US.
What will happen if geopolitical tensions intensify?
The week started with fresh worries that the US Hong Kong bill might slow down negotiations. Comments from Beijing and Washington were not so upbeat as well. However, new reports and headlines came through that a deal will happen nonetheless. Gold hit 1484 but has stayed steady below it as new concerns arose. The NATO spat between US and Canadian leader raised new speculations that Canada might have a share of US sanctions and trade fury.
France and the EU are also entering into new trade talks with the US which according to reports might get complicated along the way. Post-Brexit UK trade deals with US and others will also be one of the major talks if Brexit is done after the elections later in December. Furthermore, OPEC in his meetings in Vienna has refused to nail down the details of the output target plans.
Geopolitical tensions as a result of all these myriad of events may rise and boost demands for safe-haven assets like Gold. While all these may be on the standstill, for now, the progress of the US-China phase one deal still remains the major driver. On that note, President Trump according to Reuters said on Thursday that talks are going well.
The market looks forward to a NFP trigger
The US employment data for November will be released later today. The market expects a better non-farm payroll at 181k compared to the previous 128k. The unemployment rate is expected to remain at 3.6% with 0.3% better average hourly earnings. Huge deviation from the market consensus will definitely cause big spikes.
Gold Elliott wave analysis
In the medium-term, Gold still remains in the bearish territory. A dip to 1400-1420 is still very possible especially if a phase one deal between US and China finally goes through. From the long-term time frame, the market is emerging into an impulse wave with the 4th wave starting from 1557. In the previous updates, we have looked at the development of the wave 4 corrective structure. The current 3-weeks rally from 1445 to 1484 is completing a corrective structure as we expected in the last update with the chart below (Charting tools from TradingView).
The price hit 1480-1485 resistance zone as expected. The new chart below shows there is a sort of rejection at the zone as well.
If the employment data comes much better than expected for USD, a break below 1470 might just trigger another Gold price sell-off. A break below 1445 should happen afterwards down to 1400 psychological level. On the other hand, a much better than expected NFP will lead to a retest of the resistance zone and a strong attempt to breach.