April Comex Gold Reaction to $1819.00 Sets the Tone

Gold futures are trading nearly flat early Tuesday, but prices remained near the previous session’s over one-week high. Helping to put a lid on gains are rising U.S. Treasury yields and a firmer U.S. Dollar. Some fundamental factors underpinning prices are worries over inflation and lingering geopolitical risks.

At 05:46 GMT, April Comex gold futures are trading $1820.80, down $1.00 or -0.05%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $170.09, up $1.23 or +0.73%.

Thursday’s U.S. consumer inflation report (CPI) for January is expected to show an annual rise of 7.3%, which would be the largest such increase since 1982. The data is crucial for the Federal Reserve’s tapering timeline so a robust number could put pressure on central bank policymakers to attack inflation with aggressive tightening.

While gold is considered a hedge against inflation and geopolitical risks, a number of aggressive rate hikes by the Fed would raise the opportunity cost of holding non-yielding bullion, putting pressure on the asset’s appeal as an investment.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1856.70 will reaffirm the uptrend. A move through $1788.50 will change the main trend to down.

The short-term range is $1882.50 to $1755.40. The market is currently testing its retracement zone at $1819.00 to $1833.90.

The main range is $1682.40 to $1882.50. Its retracement zone at $1782.50 to $1758.80 is support.

Daily Swing Chart Technical Forecast

With April Comex gold currently testing the lower level of its short-term resistance zone, its direction on Tuesday will likely be determined by trader reaction to the 50% level at $1819.00.

Bullish Scenario

A sustained move over $1819.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the short-term Fibonacci level at $1833.90.

Look for resistance on the first test of $1833.90. Overcoming it, however, could trigger an acceleration into the next main top at $1856.70.

Bearish Scenario

A sustained move under $1819.00 will signal the presence of sellers. This could trigger a break into a pair of pivots at $1806.50 and $1802.60.

Taking out $1802.60 will indicate the selling pressure is getting stronger. This could lead to a test of $1788.50. Taking out this level will change the main trend to down.