The direction of the April Comex gold market on Tuesday is likely to be determined by trader reaction to $1840.70.
Comex gold futures are edging lower on Tuesday, as concerns about a faster pace of policy tightening by the U.S. Federal Reserve overshadowed safe-haven demand fueled by escalating tension over Ukraine. From a market perspective, gold is being underpinned by a small drop in U.S. Treasury yields, but a slightly stronger U.S. Dollar is providing resistance.
At 09:46 GMT, April Comex gold futures are trading $1839.60, down $4.60 or -0.25%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $172.01, up $0.92 or +0.54%.
The muted price action so far this week is a reflection of mixed news events. Helping to support prices is risk-off sentiment due to concerns over a potential military conflict between Ukraine and Russia. Putting a lid on the market, however, are rising Treasury yields on Fed tapering expectations and hedge fund position-squaring.
In other news, holdings of the world’s largest gold-backed exchange traded fund, SPDR Gold Trust, rose to their highest since late August 2021 last Friday.
The main trend is up according to the daily swing chart. A trade through $1850.80 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 trade 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 trading on the strong side of its retracement zone at $1833.90 to $1819.00, making it support.
The minor range is $1755.40 to $1850.80. If the minor trend turns down then its 50% level at $1803.10 will become support.
The main support is the $1782.50 to $1758.80 retracement zone.
On the upside, the major resistance is a long-term 50% level at $1899.80.
The direction of the April Comex gold market on Tuesday is likely to be determined by trader reaction to $1840.70.
A sustained move over $1840.70 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into $1850.80.
Taking out the minor top at $1850.80 could trigger an acceleration to the upside with the November 16 main top at $1882.50 the next target. This is followed by a major 50% level at $1899.80.
A sustained move under $1840.70 will signal the presence of sellers. The first downside target is a Fibonacci level at $1833.90, followed by the minor bottom at $1830.60 and a 50% level at $1819.00.
The selling pressure will start to open up if $1819.00 fails as support with $1807.20 and $1803.10 the next targets.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.