February Comex Gold Futures Set Up for Counter-Trend Rally into $1807.20 – $1817.20

Gold futures edged higher on Monday, reversing earlier weakness after Treasury yields and the U.S. Dollar fell from their intraday highs. Fundamentally, hedge buying also contributed to the late session strength. Traders also positioned themselves against ongoing geopolitical risks and ahead of Wednesday’s U.S. consumer inflation report that is expected to show another surge in prices.

At 21:50 GMT, February Comex gold futures are trading $1801.20, up $3.80 or +0.21%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $168.22, up $0.47 or +0.28%.

Gold prices weakened early in the session after the U.S. 10-year Treasury yield hit a two-year high. The market mounted a recovering shortly after the mid-session after the 10-year Treasury yield fell below 1.8%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1781.30 will signal a resumption of the downtrend. A move through $1833.00 will change the main trend to up.

The minor trend is also down. The new minor bottom is $1781.30. The closest minor top is $1830.70.

The short-term range is $1753.00 to $1833.00. On Monday, the market closed on the strong side of its 50% level at $1793.00, making it new support.

The main support is the long-term retracement zone at $1781.00 to $1757.10.

Another minor range is $1833.00 to $1781.30. Its 50% level at $1807.20 is the next upside target and potential resistance.

Another short-term range is $1881.90 to $1753.00. Its retracement zone at $1817.50 to $1832.70 is the key resistance zone. This stopped rallies at $1830.70 and $1833.00 last week.

Short-Term Outlook

Based on Monday’s close, the direction of the February Comex gold futures contract early Tuesday is likely to be determined by trader reaction to $1793.00.

Bullish Scenario

A sustained move over $1793.00 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $1807.20.

Overtaking $1807.20 will indicate the buying is getting stronger and could trigger an acceleration into $1817.50 to $1832.70.

Bearish Scenario

A sustained move under $1793.00 will signal the presence of sellers. It this creates enough downside momentum then look for a quick break into the support cluster at $1781.30 – $1781.00.

The 50% level at $1781.00 is a potential trigger point for an acceleration into the Fibonacci level at $1757.10. Look for counter-trend buyers on a pullback into this area.