Gold is recovering gradually above 1500 ahead of the US inflation data. The following technical analysis is based on the Elliott wave theory.
September 12, 2019 | AtoZ Markets – Gold started this week around 1500 before it dropped to 1484 on Tuesday. It was close to hitting the 1480 low before it bounced to 1498 on Wednesday. Meanwhile today, the yellow metal has broken upside early in the London session and above the 1500 handle for the first time this week. Gold is probably making a bullish correction toward prices between 1520 and 1540 before it continues the larger bearish correction. The bullish trend is intact but the bearish correction might go deeper after the current minor rally.
The US and China trade talks will resume in October. The markets are calm. The stock markets are moving modestly upside and the US treasury yields is making reasonable recoveries. However, we can’t say the markets are genuinely upbeat about the event. In fact, recent headlines suggest the two countries are still far apart in their resolutions and an agreement might not happen. Meanwhile, Gold which has seen its demand skyrocketed over a year has started to shed a bit of its profit. If an agreement is reached between China and the US with friendly an overly friendly mood, Gold might tank far below 1400. On the short term, the market’s attention will be on today’s US inflation reports.
Gold analysis: important price levels
Gold almost hit 1480 support level before advancing to the current level – 1505. The current minor recovery might continue to the 1516 and 1527 intraday resistance levels. The bearish correction is expected to continue unless the price breaches above 1557 resistance level. Below 1480, we have the 1451 and 1400 support levels as important bearish targets.
Gold Elliott wave analysis
After the double top pattern at 1557 confirmed the end of a long term Elliott wave pattern, we expected at least a 3-wave bearish correction to 1451 or even 1400 to follow. The chart below was used in the last update.
We expected a bounce at ‘1480 or its neighbourhood’. Currently, as the chart below shows, Gold price has bounced at 1484 and might continue to or above 1520.
The current minor recovery is expected toward 1520-1540 before ethe bearish correction continues. Gold might also complete a reversal head and shoulder pattern if it drops to break below the 1480-1490 support zone.