Gold Elliott wave analysis - fading mideast tension lowers prices

January 11, 2020

London (Jan 11)  The last week ended bearish for the yellow metal. It slumped to 1540 after an earlier surge to hit a new multi-year high at 1612. The rally came as a result of big crises between the US and Iran after the former assassinated the latter’s top and well-respected army leader in Iraq. Iran retaliated as promised with attacks on some US military bases in Iraq. Fears of tougher retaliation from the US and a possible war between the two countries dropped investors’ risk appetites. Gold bullish trend, as a result, strengthened and the metal hit its highest in almost 7 years.

Meanwhile, the US’s reaction afterwards has cooled down tensions as President Trump said ‘all is well’ and afterwards admitted there were no casualties. In the end, the two parties revealed no intentions for further damages that could lead to war. Risk returned, stock markets picked up, Gold and other safe-haven assets plummeted. The Gold price had its biggest slump since November. With the dip going below 1555, the bullish run from 1444 could have a deeper correction to 1520-1530 in the short-term.

New developments: US sanctions Iran amid a disappointing Job data

Following Tehran’s attack on US military bases, Washington has decided to throw economic missiles at Iran instead. Iran is now under heavier embargo from the US with fresh sanctions on its metal industry and penalties on some of its senior leaders. Meanwhile, Gold recovered slightly on Friday after a disappointing job data from the US. The world’s largest economy added 145,000 new jobs in December against 165,000 expected to hit its lowest in seven months. Gold thus closed the week at 1562. However, the bearish correction will most likely continue as the December 15 US-China phase one agreement deadline looms and Mideast tension subsides.


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