Gold Price Futures (GC) Technical Analysis – $1423.40 Potential Trigger Point for Steep Break

Gold futures hit a two-week low on Wednesday after the U.S. Federal Reserve cut its benchmark interest rate by 25-basis points as widely expected, but dampened the chances of additional rate cuts in the near future. The move by the Fed essentially represents insurance against slower economic growth.

As expected, central bank policymakers moved the U.S. central bank’s benchmark overnight lending rate to a target range of 2.00% to 2.25%, citing concerns about the global economy and tempered U.S. inflation.

However, traders were hit with a surprise after Fed Chair Jerome Powell, speaking at the post-meeting press conference, characterized the rate cut as “a mid-cycle adjustment policy”. Financial market traders took this to mean that further sharp cuts were not imminent. This boosted near-term Treasury yields and the U.S. Dollar, making dollar-denominated gold a less-desirable asset.

On Wednesday, December Comex gold settled at $1437.80, down $4.00 or -0.28%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Wednesday when sellers took out the previous main bottom at $1423.90. A secondary lower main top was formed at $1447.80 in the process. Taking out this level will change the main trend to up.

The minor range is $1396.40 to $1467.00. Its retracement zone is $1431.70 to $1423.40. This zone is controlling the short-term direction of the market.

The intermediate range is $1335.10 to $1467.00. Its retracement zone at $1401.10 to $1385.50 is the first downside target.

The main range retracement zone target is $1376.10 to $1354.60.

Daily Swing Chart Technical Forecast

Based on Wednesday’s price action, the direction of the December Comex gold futures market on Thursday is likely to be determined by trader reaction to the 50% level at $1431.70 and the Fibonacci level at $1423.40.

Bullish Scenario

A sustained move over $1431.70 will indicate the presence of buyers. This could trigger a counter-trend rally into $1447.80. If it’s taken out then the main trend will change to up. This could trigger a further rally into the main top at $1467.00.

Bearish Scenario

A sustained move under $1423.40 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into a series of main bottoms at $1413.70, $1399.80 and $1396.40. Other targets are the 50% level at $1401.10 and the Fibonacci level at $1385.50.