Gold consolidates below 1490 ahead of FOMC rate decision. The following Gold Elliott wave analysis October 30 update looks at the likely scenarios.
October 30, 2019 | AtoZ Markets – The zero-yielding metal dropped to 1483 on Tuesday to complete a 2% decline from 1518. The reports from Beijing and Washington assured things are going right well between US and China. Therefore, investors are willing to take more risk thus the demand for Gold and other safety assets have dropped. More importantly, today is the FOMC. The market expects a rate cut from the Fed as employment data is becoming a big concern for the US Central Bankers. Gold, a dollar-denominated commodity is often affected by the outcome of the FOMC. Meanwhile, on the technical front, a bearish impulse from 1518 wave is ongoing toward 1470.
The Fed is generally expected to cut rates today. That will be the 3rd consecutive month. Inflation and Employment which are the major focus of the bank have not done well in recent months. More than the rate cut decision, the market will focus on the Chair’s speech and press conference to decipher excessive hawkish or dovish tone. Eventually, if the rate cut happens with a dovish tone, USD should tank and Gold price should rally toward 1518-1520 resistance zone. On the other hand, the rate cut may be followed with hawkish comments. The USD could drop a bit but eventually pick up. Gold will then start a minor bullish correction or drop a bit below 1483 before turning upside. If there is no cut at all, that will be shocking and USD will spike. Gold should then tank to the 1470-1474 support zone.
Gold Elliott wave analysis October 30 update
In the last update, we started counting a bearish impulse wave from 1518 to complete a corrective flat pattern from 1520. We used the chart below.
The price has dropped lower and about to complete the 3rd sub-wave of wave (ii). Depending on the outcome of the Fed’s rate decision today, we will have to see how this pattern develops. The new chart below shows the wave development is still valid.
If there is no rate cut or the Fed cuts rate with an excessive dovish tone, the extremes could be shattered. We will have to wait and see.