April Comex Gold Bulls Eyeing $1882.50 – $1899.80
Gold is trading slightly lower on Wednesday, hovering just under its 10-week high as investors positioned themselves ahead of potential rate hike signals from the U.S. Federal Reserve.
The market is being underpinned by some safe-haven buying tied to the Ukraine-Russia crisis, but at the same time, prices are being capped for the same reason by a stronger U.S. Dollar.
Gold could erase this week’s gains if the Federal Reserve tightens policy faster than anticipated to curb inflation. Prices could tumble even further if the Fed suggests it could raise rates as much as six or seven times this year as predicted by Goldman Sachs.
We could see heightened volatility if the Fed sticks with the widely expected four rate hike scenario, but says it will ramp up the trimming of its almost $9 trillion balance sheet, a process dubbed quantitative tightening (QT).
The Fed reports at 19:00 GMT, but the Ukraine-Russia situation is a wildcard because no one knows if or when military activity will commence.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1856.70 will signal a resumption of the uptrend. A move through $1783.80 will change the main trend to down.
The minor trend is also up. A move through $1830.60 will change the minor trend to down. This will shift momentum to the downside.
The short-term range is $1882.50 to $1755.40. Gold is currently trading on the strong side of its retracement zone at $1833.90 to $1819.00, making it support.
Minor support comes in at $1806.10. The main support zone is $1782.50 to $1758.80.
On the upside, a major 50% level comes in at $1899.80. This is potential resistance.
Daily Swing Chart Technical Forecast
The direction of the April Comex gold futures contract early Wednesday is likely to be determined by trader reaction to $1844.30.
A sustained move over $1844.30 will indicate the presence of buyers. The first upside target is $1856.70.
Taking out $1856.70 will be a sign of strength. This could trigger an acceleration to the upside with $1882.50 the next target. Overtaking this level could lead to a surge into $1899.80.
A sustained move under $1844.30 will signal the presence of sellers. This could lead to a labored break with potential downside targets lined up at $1833.90, $1819.00 and $1806.10.
Taking out $1806.10 could trigger an acceleration to the downside with the next major target zone $1782.50 to $1758.80.