Comex Gold Futures (GC) Technical Analysis – July 25, 2016 Forecast

December Comex Gold futures are trading lower shortly before the regular session opening. An early session rally by the U.S. Dollar Index may be responsible for the weakness. Gold has been under pressure lately because of the stronger dollar. The dollar has been supported by the divergence in policy between the U.S. Federal Reserve and several other central banks. Investors have increased the odds of a Fed rate hike before the end of the year while several central banks including the Bank of Japan and the Bank of England are expected to provide more stimulus.

Long-term gold bulls cite the negative rates in Japan and the Euro Zone as one reason to remain optimistic about higher prices.  Although gold doesn’t pay interest, negative interest rates makes it a more attractive investment.

Technically, the main trend is up according to the daily swing chart. However, momentum has been to the downside since the July 6 top. On July 21, gold formed a potentially bullish closing price reversal bottom, however, this chart pattern hasn’t been confirmed. It will be confirmed on a trade through $1342.00.

The main range is $1259.10 to $1384.40. Its retracement zone at $1321.80 to $1307.00 provided support last week when the market reached a low at $1318.50.

The short-term range is $1384.40 to $1318.50. If there is a follow-through to the upside then $1351.50 to $1359.20 becomes the primary upside target.

Based on Friday’s close at $1331.50 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the downtrending angle at $1332.40.

A sustained move over $1332.40 will indicate the presence of buyers. This could lead to a test of an uptrending angle at $1339.10. Overtaking this angle will put gold in a strong position with $1351.50 to $1359.20 the next target. A downtrending angle at $1358.40 passes through this zone, making it a valid target also.

A sustained move under $1332.40 will signal the presence of sellers. The daily chart is open to the downside with $1321.80 the next target, followed by the reversal bottom at $1318.50.

Taking out $1318.50 will negate the closing price reversal bottom. This could create enough downside momentum to challenge the Fib level at $1307.00 and the uptrending angle at $1299.10.

Look for an upside bias on a sustained move over $1332.40 and a downside bias under it. Breaking under the 50% level at $1321.80 will also indicate the selling is getting stronger.