Gold has continued the multi-months rally after price broke above 1300 handle. The following looks at the technical side based on Elliott wave theory.
January 31, 2019 | AtoZ Markets - Wednesday's Fed dovish signals continue to boost the demand for the yellow metal as it spiked above 1300. The ongoing fall in the US treasury bond yield is also positive for Gold as it hits its 8-months high. Prior to the current surge, price stayed below 1300 for two weeks and fell to 1277. If the current Dollar slump continues after tomorrow's NFP data release, the demand for this precious metal will increase toward $1,370 per ounce.
In the past updates, we looked at Gold from Elliott wave perspective and had a bullish forecast with target at 1360-1370. The bullish impulse wave from 1160 persists and it's currently about to complete its 3rd wave. This means one thing- the bullish run still has some way to go and it might take more time before the next big price slump. In the last update, the chart below was used.
At 1277, price completed the 4th sub-wave of the larger degree third wave of the rally from 1160. The swift rally that followed thereafter further strengthened this case. A bullish impulse wave continued from 1277 to complete the 3rd wave of the rally from 1160. The chart above shows the 5th wave of wave (iii) had not completed before yesterday's FOMC. A slight dip was expected before the rally resumed. The dip did happen though very shallow and price surged further to 1325 after the Fed decided to leave interest rates unchanged. The chart below shows an update of the one above and what is expected next.
Gold Elliott Wave Analysis and Important Price Levels
Wave (iii) is seemingly close to completion. There is no visible reversal signal yet and price is still in the upbeat mood. Depending on what comes out of the NFP tomorrow, price is very close to starting another corrective dip which might last 1-3 weeks before the bullish forces push further to 1360-70.
Please share your thoughts with us in the comment box below