Gold Elliott wave analysis: price drops to 1 week low

The Gold price fell after the US-China trade truce. The following looks at what could happen next based on Elliott wave analysis.

July 01, 2019 | AtoZ Markets - The USD was in high demand after the US and China agreed to a trade truce. Gold plummeted to its lowest price in one week after hitting multi-year highs in June. The dip is getting close to a support base. It remains to be seen how price reacts at this price zone.

Risk appetites improved after the meeting between the US and China came out positive. The USD spiked over the weekend and has continued the bullish move in the London session. The deal is not yet sealed but the relationship between Presidents Trump and Xi did not look tampered. Therefore, investors believe a deal could still be sealed. In a time when geopolitics is weighing heavily on economics and the markets, investors will be upbeat if the two largest economies could settle their dispute.

After the G20 summit, US President Trump also met with the North Korean leader Kim Jong Un. It's of little surprise that the USD spiked upside at the market opening this week. The US Dollar is excited! The US Treasury yield which has a strong inverse correlation with Gold quickly picked. The yellow metal, therefore, dropped to its lowest in a week. There is still more volatility to come this week even before the US employment data on Friday.

Gold analysis: important price level

Since it hit a multi-year high at 1440 last week, the non-yielding metal has dropped nearly 4% to currently trade below 1390. XAUUSD is very close to a strong support zone at 1375-1368 and could bounce. If it does, a bullish push toward 1500 is likely. However, a strong dip below this zone will see Gold at 1350 or even 1300.
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Gold Elliott wave analysis

When the price hit 1440 on June 25, there were clear bearish technical signals which price has now proved to be correct. From 1160, we analyzed an impulse wave development. The dip from 1440 was expected to be the 4th sub-wave of the 5th wave. The chart below was used in the last update after the price fell to 1400.

A zigzag corrective wave iv was expected. A retest of 1420 before further dip into the 1360-1375 support zone was ideal. The chart below shows the current update.

Price retested 1420 to complete B of iv. Wave C of iv should continue to the support zone. if there is a bullish reversal signal, the demand for Gold could pick up once more. A fast dip below would see wave iv deeper to 1350.

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