April Comex Gold Looking to Retrace into $1987.00 – $2008.70

Gold futures are edging higher on Thursday as traders reacted to a drop in Treasury yields and a weaker U.S. Dollar. The catalyst behind the price action is the Federal Reserve’s inability to rattle traders with its widely expected first interest rate hike in three years and subsequent projections of additional rate hikes throughout the year on Wednesday.

At 11:34 GMT, April Comex gold futures are trading $1943.50, up $34.30 or +1.80%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $180.02, up $1.13 or +0.63%.

The U.S. central bank on Wednesday raised interest rates by 25 basis points, but the expected hike appears to have failed to ease inflation worries, keeping gold’s appeal as an inflation hedge intact.

Although the Fed laid out an aggressive plan to push borrowing costs next year, the dollar and yields on 10-year U.S. Treasury notes eased, with investors seemingly having priced in an even stronger rate hike, boosting gold.

The recent price action suggests that gold investors may have reduced the war premium, but they are still worried about rising inflation.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1821.10 will change the main trend to down. A move through $2078.80 will signal a resumption of the uptrend.

The minor trend is also up. A trade through $1895.20 will change the minor trend to down. This will shift momentum.

The main range is $2117.10 to $1682.40. The market is currently trading inside its retracement zone at $1899.80 to $1951.00. This zone could be controlling the longer-term direction of the market.

The short-term range is $1682.40 to $2078.80. Its retracement zone at $1880.60 to $1833.80 is additional support.

The two retracement zones combine to form a support cluster at $1899.80 to $1880.60. This zone stopped the selling at $1895.20 on Wednesday.

The short-term range is $2078.80 to $1895.20. Its retracement zone at $1987.00 to $2008.70 is the next potential upside target.

Daily Swing Chart Technical Forecast

The direction of the April Comex gold futures contract on Thursday is likely to be determined by trader reaction to the Fibonacci level at $1951.00.

Bullish Scenario

A sustained move over $1951.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the short-term retracement zone at $1987.00 to $2008.70.

Bearish Scenario

A sustained move under $1951.00 will signal the presence of sellers. This could trigger a retest of $1899.80 to $1880.60. If this area fails as support then look for the selling to possibly extend into the Fibonacci level at $1833.80.