April Gold Futures Bid after Failing to Confirm Reversal Top

Gold futures are trading nearly flat early Wednesday after testing its highest level since November 16 the previous session. The catalysts behind the selling pressure are easing fears of a Russian invasion of Ukraine and rising U.S. Treasury yields.

The U.S. Dollar is weaker, but that is having a limited effect on prices since the move is related to safe-haven liquidation rather than economic news. Once the safe-haven selling is over then the dollar should firm on expectations of a Fed rate hike in March. This could put a lid on gold prices.

Nonetheless, yesterday’s closing price reversal top has not been confirmed, suggesting buyers are still present.

At 09:33 GMT, April Comex gold is trading $1858.30, up $2.10 or +0.11%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $173.02, down $1.72 or -0.98%.

Later today, traders will get the opportunity to react to a slew of U.S. economic reports including Retail Sales at 13:30 GMT. At 19:00 GMT, the Fed will release is January meeting minutes. This could be the source of volatility.

Additionally, data out Tuesday morning showed prices at the wholesale level jumped twice the expected level in January, the Labor Department reported.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside following the formation of a potentially bearish closing price reversal top on Tuesday.

A move through $1845.40 will confirm the closing price reversal top. This could trigger the start of a 2-3 day correction. A trade through $1821.10 will change the main trend to down.

A trade through $1881.60 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor range is $1821.10 to $1881.60. The market is currently trading on the strong side of its pivot at $1851.40.

The short-term range is $1882.50 to $1755.40. Its retracement zone at $1833.90 to $1819.00 is support.

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

The long-term resistance zone is $1899.80 to $1951.00.

Daily Swing Chart Technical Forecast

The direction of April Comex gold on Wednesday is likely to be determined by trader reaction to $1851.40.

Bullish Scenario

A sustained move over $1851.40 will indicate the presence of buyers. The first minor target is $1863.50. Overtaking this level could trigger a further rally into the November 16 main top at $1882.50, followed by a long-term 50% level at $1899.80.

Bearish Scenario

A sustained move under $1851.40 will signal the presence of sellers. Taking out $1845.40 will confirm the closing price reversal top. This could trigger a further break into $1833.90, followed by a support cluster at $1821.10 – $1819.00.

Taking out $1821.10 will change the main trend to down, while a move through $1819.00 is likely to trigger an acceleration to the downside with $1782.50 – $1758.80 the next target zone.