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James Hyerczyk
Comex Gold

Gold futures are testing their lowest level in two weeks on Wednesday as hopes of a quick economic recovery drove investors towards higher-yielding assets, while U.S.-China tensions over Hong Kong may be helping to limit losses.

Optimism about the development of coronavirus vaccines and a revival of business activity is lifting risk sentiment in the financial markets. Traders are also responding to Tuesday’s economic data that showed U.S. consumer confidence nudged up in May and new home sales beat expectations.

At 12:41 GMT, August Comex gold is trading $1708.20, down $20.00 or -1.16%.

On the pessimistic side, growing political unrest in Hong Kong over Beijing’s proposed national security laws has kept investors on the edge. President Trump also said Washington was working on a strong response to China, adding it would be announced before the end of the week.

Some traders are saying the market could be in for a steep fall if the psychological support at $1700 fails to hold.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum has been trending lower since the formation of the closing price reversal top on May 18. A trade through $1787.50 will signal a resumption of the uptrend, while a move through $1668.40 will change the main trend to down.

The minor trend is down. This also confirms the shift in momentum to down.

The short-term range is $1789.00 to $1668.40. Its 50% level or pivot at $1728.70 is new resistance.

The main range is $1454.80 to $1789.00. Its retracement zone at $1621.90 to $1582.40 is the primary downside target.

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Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $1708.20, the direction of the August Comex gold futures contract the rest of the session on Wednesday is likely to be determined by trader reaction to the short-term 50% level at $1728.70.

Bearish Scenario

A sustained move over $1728.70 will indicate the presence of sellers. The next targets are a pair of minor bottoms at $1705.00 and $1691.00. The latter is a potential trigger point for an acceleration into $1683.30.

Bullish Scenario

Overtaking $1728.70 will signal the presence of buyers. If this creates enough upside momentum then look for a possible surge into $1745.10.

For a look at all of today’s economic events, check out our economic calendar.

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