Gold Price Futures (GC) Technical Analysis – Strengthens Over $1506.40, Weakens Under $1504.40

Gold is trading lower on Wednesday at the mid-session. A relative calm in the financial markets is encouraging some short-term investors to take profits after posting a $62.10 gain earlier this week. Sellers are responding to rising global bond yields, a steady Chinese yuan and increasing demand for higher-risk assets.

At 15:10 GMT, December Comex gold is trading $1508.00, down $11.80 or -0.78%.

With central banks likely to continue to be more accommodative, the longer-term bias is to the upside especially if some go to negative rates. Gold doesn’t pay interest, but earning zero percent is better than having to pay a central bank to borrow your money. Longer-term gold traders want to see the central banks go to negative rates. Therefore, the main driver of the price action over the near-term will be the direction of global bond yields. If you’re a long-term trader, then try to avoid getting caught up in the day-to-day headlines.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through yesterday’s high at $1522.70 will signal a resumption of the uptrend. This could trigger a move into the March 14, 2014 main top at $1532.40.

The uptrend is safe for now. It will change to down on a trade through $1412.10. However, there is room for a short-term correction.

The short-term range is $1412.10 to $1522.70. Its retracement zone target is $1467.40 to $1454.30. Since the trend is up, a test of this zone will bring in new buyers.

Daily Technical Forecast

Based on the early price action and the current price at $1508.00, the direction of the December Comex gold futures contract the rest of the session on Thursday is likely to be determined by trader reaction to a pair of uptrending Gann angles at $1506.40 and $1504.40.

Bullish Scenario

A sustained move over $1506.40 will indicate the presence of buyers. If this move is able to create enough upside momentum then look for a rally to possibly extend into $1522.70 then $1532.40.

Bearish Scenario

A sustained move under $1504.40 will signal the presence of sellers. This could trigger a break into the steep uptrending Gann angle at $1492.10. Look for a technical bounce on the first test of this angle.

Taking out $1492.10 could trigger an acceleration to the downside with the next target the short-term retracement zone at $1467.40 to $1454.30. This zone is value and your best buying opportunity if it gets there.