Gold Elliott wave analysis: price retreats after contradicting trade talk headlines

The market went into a frenzy run after contradicting trade headlines. Gold is back to 1505 after a massive surge above 1515. The following outlook includes the Gold Elliott wave analysis.

October 10, 2019 | AtoZ Markets – In the last 24 hours, the markets have generally responded mostly to the trade talks between US and China scheduled to start today, Thursday. Mostly on Wednesday, the markets moved mildly until after the New York session and the start of the Sydney/Asian session, when the markets reacted to trade headlines. Gold surged to 1517 in a massive 150-pips move. Afterwards, it dropped lower to 1505 as the meeting gets underway in Washington.

Markets react to contradicting trade talks headlines

There were contradicting headlines during the Asian session. At first, a Hong Kong news outlet reported that that the two countries were making no progress on key trade issues during the two days deputy-level talks. The report added that the high-level talks scheduled for Thursday and Friday will now hold for a day. The negative sentiment sent a strong wave to the market. Risk-on assets like the Stock market, AUD, NZD and CAD slumped drastically. While Gold and other risk-off assets like the CHF and JPY surged.

Gold hit 1517 and looked ready to break toward the 1520 and 1535 resistance levels. However, sources from the US stated that President Trump may be ready to abandon his toughest demands on China and get the deal done for the prospect of recession. US consumers have also been hit by the tariffs on China and this might lead to more troubles than expected. The idea of an ending trade-war gave the stock markets a great boost and Gold fell fast to 1505.

Gold Analysis: important price levels

Resistance Levels: 1520, 1535 and 1557. If the first reports from China finally play out, the trade talk might be abandoned or postponed. This prospect will send Gold upwards above 1535 and toward 1557 and maybe hit 1600.

Support Levels: 1497, 1484 and 1458. If the two parties lower their demands and reach an agreement to end the conflict, Gold is expected to slump below 1497 and 1484. We will have to see if 1458 will be able to hold it.

Gold Elliott wave analysis

Gold bullish trend resumed in October from 1458. After pushing to 1520, it dropped to 1488. In the last update, we started an impulse wave from 1454 as the chart below shows.

The price pushed above the channel but is still held below 1520 due to the conflicting trade talks headline. The new chart below shows what could happen next.

The chart above shows the two most likely scenarios. The first expected wave (ii) to have ended at 1458. The current dip is wave ii of (iii) and is expected to end around 1502-1498 if it drops below the current level. If there is no agreement, the Gold price is expected to surge above 1517 to activate this scenario.

On the other hand, wave (ii) might be completing a double zigzag pattern to 1484. A successful deal will cause this to happen. However, depending on the intensity of the outcome and the volatility of the reaction that follows afterwards, it remains to be seen whether 1484 will be able to hold the falling knife.


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