April Gold Testing Support Zone at $1899.80 – $1951.00

Gold futures are edging lower on Wednesday as investors continue to monitor the progress of peace talk negotiations between Russia and Ukraine while awaiting the Federal Reserve’s monetary policy and interest rate decisions due to be released at 18:00 GMT.

Additionally, although the U.S. Dollar is moving lower, gold prices are under pressure due to increasing demand for higher risk assets like stocks and rising Treasury yields.

At 12:46 GMT, April Comex gold futures are $1920.50, down $9.20 or -0.48%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $178.91, down $3.39 or -1.86%.

The Fed is widely expected to announce its first interest rate hike in three years to tackle soaring inflation. Gold is highly sensitive to rising U.S. interest rates, and consequently higher yields on benchmark U.S. 10-year Treasury notes, which increase the opportunity cost of holding non-yielding bullion.

Although gold is well-off its recent multi-year high, the trend is still up with some analysts believing that once traders have digested the Fed’s policy signals, the rally could resume because of the uncertainty over the war in Ukraine.

Daily Swing Chart Technical Analysis

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

The minor trend is also up. A trade through $1878.60 will change the minor trend to down. This will also shift momentum.

The major support is the long-term retracement zone at $1899.80 to $1951.00. The market is currently testing this zone. The main retracement zone is $1880.60 to $1833.80.

The two retracement zones combine to form a potential support cluster at $1899.80 to $1880.60. This is a value area in my opinion so buyers could return on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the April Comex gold futures contract on Wednesday is likely to be determined by trader reaction to a minor pivot at $1925.40.

Bullish Scenario

A sustained move over $1925.40 will indicate the presence of buyers. This could lead to a test of the Fibonacci level at $1951.00.

Overtaking $1951.00 will indicate the buying is getting stronger. This could trigger a further rally into another minor pivot at $1993.50. Trader reaction to this level could determine the near-term direction of this market.

Bearish Scenario

A sustained move under $1925.40 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the support cluster at $1899.80 to $1880.60. Since the main trend is up, look for buyers to come in on a test of this area.

If $1880.60 fails, however, then look for an acceleration into the main Fibonacci level at $1833.80. This is the last potential support since the $1821.10 main bottom.