Gold Price Analysis: Elliott Wave analysis shows that prices could be heading towards $1600


  • The price of the yellow metal has fallen 1.5% on Friday.
  • There could be a new Elliott Wave pattern to the downside.

Fundamental backdrop

There has been lots going on over the past few sessions with both the ECB and Fed giving us updates. Without going into a long-winded rant about all money being worthless in this environment, it seems that both of the worlds biggest central banks have confirmed their relative forms of QE are here to stay for as long as they are needed. This also includes previous rounds which are going to be reinvested. Despite this fact, the markets seem to be latching on the theme that the economies are going to reopen soon but the indices are struggling today. A mixture of month-end flows and a worse than expected US jobless claims number (3,839K vs Exp 3,500K) sent equities tumbling with all major EU and US bourses trading lower despite a fairly healthy Asian session. 

Some of the recent market rallies seem to have been based on hope. The Gilead Sciences drug seems to be having some positive test results but the fact remains that it may take some time for the drug to hit the mainstream and the economic hit from all the shutdowns may be bigger than analysts initial expectations. Despite this gold has fallen from best levels but if the price waves are anything to go by this could be the start of a downtrend. 

Italy have reported 1,872 new coronavirus cases vs 2,086.

The number of UK coronavirus cases rise to 171,253 vs 165,221 new virus deaths rise to 674 vs 765.

Technical picture

The price of gold has come off somewhat in recent sessions. The price has posted a new wave low taking out the USD 1692.38 support zone. More importantly, this means that the price has now made a lower high lower low formation on the hourly chart.

This is highlighted in the chart below, which also confirms a bounce off the 76.4% Fibonacci retracement level (slightly deviated over). This means that overall this could be a new Elliott Wave formation to the downside and the price could be in the 3rd wave. The rule for the 3rd wave is that more often than not it is the longest but it must not be the shortest.

That puts the 161.8 downside target just above but close to USD 1610.00. On the flipside, if the price moves higher and breaks the USD 1720.00 wave high the pattern could be negated. At the moment though the bears look to be winning the battle.

The key support level is now at USD 1661.18, this is the wave 1-2 low this would also need to be broken to confirm that we are indeed in a wave 3 to the downside. Keep a close eye on how the price reacts there as it could confirm the bearish bias. 

Gold sells off

Additional levels

XAU/USD

Overview
Today last price 1687.82
Today Daily Change -25.42
Today Daily Change % -1.48
Today daily open 1713.24
 
Trends
Daily SMA20 1685.41
Daily SMA50 1635.21
Daily SMA100 1588.52
Daily SMA200 1538.33
 
Levels
Previous Daily High 1717.96
Previous Daily Low 1698.06
Previous Weekly High 1739
Previous Weekly Low 1661.18
Previous Monthly High 1703.27
Previous Monthly Low 1451.3
Daily Fibonacci 38.2% 1710.36
Daily Fibonacci 61.8% 1705.66
Daily Pivot Point S1 1701.55
Daily Pivot Point S2 1689.85
Daily Pivot Point S3 1681.65
Daily Pivot Point R1 1721.45
Daily Pivot Point R2 1729.65
Daily Pivot Point R3 1741.35

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD: Bull pennant in play above 200-SMA

EUR/USD picks up bids after a subdued performance on Monday. After a dull start to the week, EUR/USD gains upside momentum, poking 1.1875 amid the early Tuesday morning in Asia. Weaker Momentum line challenges the up-moves but pennant confirmation could propel the buyers.

EUR/USD News

GBP/USD: 100-day EMA defends bulls around 1.3900

Having portrayed a two-day pullback from the highest levels since late June, GBP/USD licks its wounds around 1.3890 amid Tuesday’s Asian session. The cable seesaws between a downward sloping trend line from June 01 and 100-day EMA. However, bullish MACD and a successful rise above 200-day EMA favor buyers.

GBP/USD News

EUR/USD: Bull pennant in play above 200-SMA

EUR/USD picks up bids after a subdued performance on Monday. After a dull start to the week, EUR/USD gains upside momentum, poking 1.1875 amid the early Tuesday morning in Asia. Weaker Momentum line challenges the up-moves but pennant confirmation could propel the buyers.

EUR/USD News

Ethereum Classic price squeezed, puts ETC on the verge of a sharp move

Ethereum Classic price has not accomplished anything since claiming the 2018 high on July 24, showing a 3.60% gain over the last nine days. The lack of price traction stands in contrast to the unstoppable advance for Ethereum over the last 13 days. 

Read more

Looking ahead to payrolls as markets bounce on China / US truce

Equity markets have started the week on an upbeat note, after a bumper round of earnings reports in recent sessions have helped to boost sentiment. 

Read more

Majors

Cryptocurrencies

Signatures