April Gold Ranging Between $1819.00 and $1782.50 Pivots

Gold futures are drifting lower early Thursday as traders seem unwilling to take a major position on either side ahead of key central bank decisions from the Bank of England (BOE) and the European Central Bank (ECB). Stable U.S. Treasury yields and U.S. Dollar are also capping gains. Perhaps underpinning prices are the lingering geopolitical tensions between Ukraine and Russia.

At 10:02 GMT, April Comex gold futures are trading $1803.70, down $6.60 or -0.36%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $168.83, up $0.60 or +0.36%.

Traders expect the BOE to raise interest rates again and signal further unwinding of its pandemic stimulus later in the day, while the ECB is set to keep policy unchanged but acknowledge surging inflation.

The correlation between the U.S. Dollar and gold is very high at this time with the latter garnering some support this week from comments from a handful of central bank policymakers downplaying fears of aggressive tightening.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through $1780.60 will signal a resumption of the downtrend. A move through $1856.70 will change the main trend to up.

The minor trend is up. This is controlling the momentum. The minor trend changed to up on Wednesday when buyers took out $1809.70. A trade through $1794.60 will change the minor trend to down.

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

The minor range is $1780.60 to $1812.00. Its 50% level or pivot at $1796.30 is the nearest support.

The major support is a retracement zone at $1782.50 to $1758.80. This area is controlling the longer-term direction of the market.

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 $1803.30.

Bullish Scenario

A sustained move over $1803.30 will indicate the presence of buyers. If this creates enough upside momentum then look for a retest of $1812.00. Taking out this level will likely lead to a test of $1819.00 to $1833.90. Since the main trend is down, look for sellers to defend this area.

Bearish Scenario

A sustained move under $1803.30 will signal the presence of sellers. The first downside target is $1796.30. Taking out this level could trigger a sharp break into the support cluster at $1782.50 – $1780.60.

A failure at 1780.60 could trigger an acceleration into the major Fibonacci level at $1758.80.

Side Notes

We’re expecting a mostly rangebound trade over the near-term until the Fed offers some clarity on the timing of future rate hikes beyond March. Friday’s U.S. Non-Farm Payrolls report could offer some insight into this.