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Gold Price Futures (GC) Technical Analysis – $1517.50 Controlling Direction; $1479.10 to $1453.50 Value Zone

Based on the early price action and the current price at $1512.10, the direction of the December Comex gold futures contract on Wednesday is likely to be determined by trader reaction to the pivot at $1517.50.
James Hyerczyk
Comex Gold

Gold prices are trading slightly lower on Wednesday following yesterday’s rebound rally and higher close. This week’s price action suggests traders are just making a market ahead of the release of the Fed minutes from its monetary policy meeting last month. Traders are particularly sensitive to the direction of U.S. Treasury yields and demand for risk.

At 05:26 GMT, December Comex gold futures are trading $1512.10, down $3.60 or -0.24%.

The Fed minutes could determine the tone of the market into Friday’s speech by Fed Chair Jerome Powell at the Jackson Hole, Wyoming, central bankers’ symposium. In July, the central bank cut rates by 25 basis points, citing “global developments” and “muted inflation.” Traders will be looking for clues as to how aggressive policymakers are will to be to prevent a U.S. recession. Dovish Fed minutes will be bullish for gold, hawkish will be bearish. However, the price action could be limited if enough of the major players decide to sit on the sidelines ahead of Powell’s speech.

Daily December Comex Gold

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending sideways to lower since the formation of the closing price reversal top on August 13 at $1546.10.

A trade through $1546.10 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $1488.90 will confirm the closing price reversal top and the shift in momentum to down.

The minor range is $1546.10 to $1488.90. Its 50% level or pivot at $1517.50 has been controlling the direction of the gold market for six consecutive trading sessions. This indicates investor indecision and impending volatility. It also means traders are waiting for news.

The short-term range is $1412.10 to $1546.10. Its retracement zone at $1479.10 to $1463.30 is the first downside target.

The intermediate range is $1396.40 to $1546.10. Its retracement zone at $1471.30 to $1453.60 is the second downside target.

The short-term retracement zone actually overlaps the 50% level of the intermediate retracement zone at $1471.30. This indicates solid support.

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Daily Technical Forecast

Based on the early price action and the current price at $1512.10, the direction of the December Comex gold futures contract on Wednesday is likely to be determined by trader reaction to the pivot at $1517.50.

Bullish Scenario

A sustained move over $1517.50 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to make a run at $1546.10. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $1517.50 will signal the presence of sellers. The daily chart shows that sellers have a clear shot at $1488.90. If this fails then look for a labored break into the series of retracement levels at $1479.10, $1471.30, $1463.30 and $1453.60.

Since the main trend is up, buyers will be looking for value. The value zone is pretty wide at $1479.10 to $1453.60.

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