Gold Elliott wave analysis: price dips below 1530

Gold has been resisted at 1550 and pushed lower to 1520. The following looks at the technical analysis based on the Elliott wave theory.

August 30, 2019 | AtoZ Markets – The yellow metal dropped fast after it was resisted at 1550. After breaking above the 1500 handle last week, its price has stayed above the critical level throughout this week. At the same time, the bullish run has been quite limited below 1550. The 1500-1550 has thus been a strong resistance zone. On Thursday, the commodity dropped quickly from 1550 to 1520 before it ended with a retracement to 1529. This retracement continued this week to 1533 before dropping to the current 1524. On the short term, the metal is starting a fairly bearish run. However, the prevailing trend is still bullish.

Gold has primarily been driven by the ongoing tariff war between the US and China. Investors try to cut down risk by putting their funds in monetary ‘safe-haven’ assets. It’s then of no surprise that Gold, Japanese Yen and the Swiss Franc have recorded huge gains and maintained a bullish trend for the best part of the last 12 months. The latest developments suggest no-deal will happen anytime soon. Gold should then have more demands and rally after minor dips. If however, there is an agreement anytime this year, a big price dip will happen. Meanwhile, traders’ attention will temporarily shift to the series of high-impact economic events coming next week. 

Gold analysis: important price levels

To the upside, 1550 remains the price to beat – the nearest hurdle to 1600. To the downside, we might see a minor bearish correction to the 1500 handle. There are also support levels at 1480, 1451 and of course the 1400 handle. These are important levels to note in the short-term.

Gold Elliott wave analysis

From the previous updates, we highlighted the 1500-1550 as a potential turning point for the bear. However, a bearish pattern is expected to be seen to give this price zone more importance considering how the current political atmosphere favours the commodity. From 1160, price has completed a wave pattern in the last 12 months. In the last update, we looked forward to an ending diagonal reversal pattern as the chart below shows.

The current price activities have violated this formation with a dipwe below 1530 after it failed to break above the current high. 

With the current decline, we might still have a minor impulse wave to end wave v. If wave v has ended at 1555, then a dip below 1500 will happen and then further decline to 1451 or 1400 is very likely. On the other hand, another surge toward 1555 will most likely lead further surge to 1600. The latter seems more likely with the current fundamental and political happenings. 


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