Gold Breakout Over $1833.90 Targets $1856.70 Main Top

Gold futures are trading flat early Thursday as investors awaited U.S. inflation data that could offer fresh clues about the pace of the Federal Reserve’s monetary policy tightening. The market is also hovering just under a key technical resistance level that could trigger an acceleration to the upside.

At 04:11 GMT, April Comex gold is trading $1835.50, down $1.10 or -0.06%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $171.20, up $0.57 or +0.33%.

The inflation data is expected to show a 0.5% month-over-month increase in January, and 7.3% for the year, according to economists polled by Reuters.

A robust inflation reading is expected to burnish gold’s mettle as an inflation hedge, but any interest rate hike to contain pricing pressure would raise the opportunity cost of holding non-yielding bullion.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1856.70 will reaffirm the uptrend. A move through $1788.50 will change the main trend to down. Taking out $1780.60 will reaffirm the downtrend.

The short-term range is $1882.50 to $1755.40. Gold futures are currently trading on the strong side of its retracement zone at $1833.90 to $1819.00, making it support.

The minor range is $1780.60 to $1837.10. Its 50% level at $1808.90 is a potential downside target.

The main range is $1682.40 to $1882.50. Its retracement zone at $1782.50 to $1758.80 is support. It’s also controlling the longer-term direction of the market.

Daily Swing Chart Technical Forecast

The direction of April Comex gold on Thursday is likely to be determined by trader reaction to $1833.90.

Bullish Scenario

A sustained move over $1833.90 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible acceleration to the upside with $1856.70 the next major target.

Taking out $1856.70 will change the main trend to up. This could lead to a test of the main top at $1882.50, followed by a 50% level at $1899.80.

Bearish Scenario

A sustained move under $1833.90 will signal the presence of sellers. This could trigger a quick break into a pair of 50% levels at $1819.00 and 1808.90.

Taking out $1808.90 will indicate the selling pressure is getting stronger with the next targets clustered at $1788.50, $1782.50 and $1780.60.