Gold rallied above 1520 after the NFP came worse than expected. The following technical analysis is based on the Elliott wave theory.
September 6, 2019 | AtoZ Markets – The demand for Gold dropped on Thursday and its price quickly fell below the 1516 minor support level. 1550-1555 resistance zone continues to hold as attempts to breach above it failed. The price continued downside on Friday to 1503 before the Non-Farm Payrolls data for August was released. It came worse than expected and Gold bounced above 1520 to halt the sell-off.
The August NFP came at 130k – 24k worse than expected. Meanwhile, the average hourly earnings increased by 0.4% better 0.3% than was expected. The unemployment rate was unchanged at 3.7% just as the market forecast. USD has dropped moderately against the majors including the Gold. Meanwhile, while the long term trend is bullish, the short-term bearish correction might continue after the market absorbs the NFP. Later today, Fed chair Powell will deliver a speech at an event in Zurich. The market might react to any hawkish or dovish statement that deviates from what it expects.
Gold analysis: important price levels
The Gold price has returned above the 1516 support level after it was breached on Thursday. It remains to be seen whether the driver of the current rally is strong enough to push to the 1550-1557 resistance zone. The price remains between the 1500 and 1600 handle. To the downside, there are support levels at 1480 and 1451 which must be breached before the 1400 handle.
Gold Elliott wave analysis
The long term Elliott wave analysis suggests that Gold is close to the top. A bearish correction to 1400 is expected to happen. However, it was not forthcoming as the current political and economic events headed by the US-China trade war still favor the precious metal. Besides, the rally from 1400 was expected to complete an impulse wave. The 5th sub-wave of the impulse wave from 1400 was expected to complete an impulse wave or ending diagonal pattern of its own. The chart below was used in the last update.
Price eventually dropped below 1533 and 1516 before the current lift. However, there is no reversal pattern spotted apart from a double top as shown in the new chart below.
If the current pullback is minor and a bearish break below 1502 follows, Gold might drop to 1451 at least.