Gold Elliott wave analysis: price eyes 1280

Gold broke below 1300 last week to return downside. What next? The following technical insight is based on the Elliott wave theory.

Gold prices dropped lower on Monday as the bearish run resumes. After dropping below the 1302-1300 support zone, the safe haven commodity is now looking much likely to hit its 4 weeks low at 1280. There are big possibilities that the yellow metal would go deeper to continue the bearish run that started at 1346 in late February.

The commodity is losing its safe-haven appeal following reports that US and China are getting closer to striking a trade deal. The Dollar strength was seen across the board after recovering from the dovish Fed comments also contributes to the current drop seen in the zero-yielding metal. The greenback is looking like the more preferred safe haven but for how long will this be?

Gold rallied close to the 1300-1302 resistance (formerly support) zone on Friday but dropped back below 1295 in the last hours. This week, the price has returned downside, close to 1286 Friday low. It seems there is still more digging to do as price heads to test 1280 low.

Gold Elliott wave analysis and important price levels

In the past updates, we identified the drop from 1346 as a corrective 4th wave of the bullish impulse wave from 1160. Wave a ended at 1280 and the rally that followed (wave b) looks corrective as expected. Price was expected to stay below 1325 before the bears take over for wave c below 1280. Price did exactly as expected and dropped far below 1300 to 1290 and bottomed last week at 1286. From 1325 where wave c started, as the chart below used in the last update shows, we labelled a new bearish impulse wave count.

If the price is able to complete a clear impulse wave below 1280, this metal should resume the bullish trend. That is not cast on a stone but for now, we can observe the current dip and check how deeper the price could go.

Wave c is still in motion. The first three sub-waves look to have completed at 1286. The 4th sub-wave could have completed with the minor upswing to 1300. Alternatively, price might make one more leg toward 1300 again to make a sharp 3-swing 4th wave. The 5th sub-wave of c should continue below 1280 toward 1260. We shall see if the price will bounce off 126x or dip below it. Gold price will remain under bearish pressure unless a fast break happens above 1325.

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