Gold has surged above 1500 after the Fed’s monetary decisions on Wednesday. The following Gold Elliott wave analysis October 31 update looks at what could happen next.
October 31, 2019 | AtoZ Markets – The yellow metal was barely trading around 1490 before Wednesday’s Fed rate cuts and other monetary announcements. Currently the commodity trades around 1510 after an initial dip to 1481. However, the Fed has finished cutting rates in 2019 and will rather monitor economic situations than being active. The Fed chair highlighted that out of the three major risks the bank has been monitoring, two are moving toward resolution. First, trade deal with China has been partly resolved and the two parties are optimistic of the situation. Second, Brexit is getting closer than before. A ‘no deal’ is off the table; only the exit time remains the issue. The only risk now is the global growth which has been on a downward slope as a result of the other two risks and other geopolitical tussles. If everything comes back to normal, it will still take time before the markets feel the full effect.
Meanwhile, the Gold market can serve as a barometer to measure investors’ risk appetite. The non-yielding metal benefitted strongly from the US-China trade war as a safe-haven asset. However, despite the progress made in trade talks so far, the metal still swings up and down. It shows there is still a considerably high amount of funds flowing into risk-off assets. Gold is currently flying high toward the 1517-1520 resistance zone.
Gold Elliott wave analysis October 31 update
Technically, Gold will most likely return to the upside especially if it manages to break above the 1517-1520 resistance zone. A corrective Flat pattern just completed at 1481 although it terminated higher than expected. The Gold price is still confined between 1520 and 1474. Where the price breaks away will be very significant to its near-term direction. In the last update, we used the chart below.
The Gold market moved as expected. Wave (ii) completed a flat pattern with an impulse wave ending the last leg. However, it was a way short of the 1470-1474 reversal zone. The new chart below shows the Gold Elliott wave analysis October 31 update.
Wave (ii) ended at 1481 where wave (iii) has already started. Our attention will now be on how far wave i of (iii) will go before the wave ii dip. Apparently, 1517-1520 zone may offer resistance and there we might see the start of wave ii. At the end of wave ii, new buyers will be getting set to jump in and push toward the 1535 and 1557 resistance levels. Unless a shockingly rapid fall below 1481 happens, Gold is bullish and the next ultimate long-term target is 1600.