Gold price goes sideways beneath resistance zone

The Gold price goes sideways below 1480 critical level. The US-China trade conflict continues to cast a shadow on the market. 

The yellow metal met a resistance just below 1480 on Wednesday before it dropped to 1466. The metal dropped during the Asian session after China’s commerce ministry said the two teams from US and China are still communicating. However, despite resuming the bearish run into the European session, the non-yielding metal still floats above yesterday’s 1466 low. From a short timeframe, the Gold price goes sideways since Monday’s intraday bullish breakout. More headlines are expected until the next official meeting.

Gold price goes sideways following contradictory trade headlines 

The market has reacted mildly to trade talks headlines this week. From the US, the legislature has voted to look into Hong Kong affairs as protests rock the Chinese-controlled territory. President Trump will sign the bill today. The expected retaliatory moves from China have led to increased pessimism that the trade deal may not be completed this year.

To worsen the case, President Trump recently expressed doubts over China’s willingness to meet up with his expectations. Earlier, he threatened higher tariffs if an agreement is not reached for the first phase. Although China’s Ministry of Commerce has renounced the report that there is a doubt in the Beijing camp, the actions from Washington further confuse investors. Until the two teams officially agree on the first phase of the deal, the market will persistently be flooded with trade headlines.

Gold technical analysis – Elliott wave theory

Technically, the Gold price might drop below 1443 before the bullish trend resumes. In the last update, we looked at two scenarios. However, the price pattern emerging from the 1443 low is looking corrective. As the chart below shows (charting tools from TradingView), the dip from 1517 is either completing a bearish impulse wave or a zigzag pattern which might continue to 1420-1400 critical price zone.

Gold price goes sideways

The gold price will have to break below the corrective channel to 1456 at least. A minor bounce could happen afterwards before the price continues to 1420-1400 zone. This scenario is possible especially if there is a major positive trade deal headline in the coming days. Conversely, if the price breaks above 1480, we might see a resurgence back to 1500 psychological level. This will happen if the current negative trade news persists.

Read Also: EURUSD technical analysis ahead of ECB minutes

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