August Comex Gold futures are trading sharply higher shortly before the regular session opening. Traders may be reacting to the weaker U.S. Dollar or
August Comex Gold futures are trading sharply higher shortly before the regular session opening. Traders may be reacting to the weaker U.S. Dollar or dovish comments from Federal Reserve policymaker James Bullard who told a Tokyo audience that the path of inflation in the U.S. is “worrisome”. He also said he thinks the U.S. central bank’s plan for raising interest rates in the coming years is also too aggressive.
Bullard’s statement cause a minor sell-off in U.S. Treasury bonds, helping to drive down the U.S. Dollar, while supporting gold prices.
Traders could also be positioning themselves ahead of today’s U.S. Core Durable Goods and Preliminary GDP reports.
The main trend is down according to the daily swing chart. However, momentum is now trending higher after buyers took out the previous closing price reversal top at $1268.30. The move also negated the chart pattern.
The main range is $1300.30 to $1217.80. Its retracement zone is $1259.10 to $1268.80. Trading above this zone also supports the idea that momentum has shifted to the upside after several days of sideways price action.
Based on the current price at $1271.00 and the earlier price action, the direction of gold the rest of the session is likely to be determined by trader reaction to the cluster of prices at $1268.80, $1269.80 and $1271.30.
Overtaking $1271.30 will indicate the buying is getting stronger. The daily chart is wide open to the upside over this angle so we could see an acceleration to the upside with $1285.80 the next potential target angle. This is the last potential resistance angle before the $1300.30 main top.
A sustained move under $1268.80 will signal the return of sellers. If the selling is strong enough, we could see an acceleration into the major 50% level at $1259.10.
The tone of the market is bullish ahead of the regular session opening, but we’re going to need a breakout over $1271.30 to keep the upside momentum going.
Look for an upside bias on a sustained move over $1271.30 and for a downside bias to develop on a sustained move under $1268.80.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.