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James Hyerczyk
Comex Gold

Gold futures posted a choppy, two-sided trade before moving slightly higher late in the session on Thursday. After an early surge, gold prices eased from a two-week high as investors booked some profit following an upside spike the previous session. Meanwhile, expectations for further stimulus and a weaker U.S. Dollar helped limit losses.

At 21:50 GMT, April Comex gold is trading $1873.20, up $3.00 or +0.16%.

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Bullish traders are betting on President Joe Biden’s $1.9 trillion dollar coronavirus stimulus package to move smoothly through Congress. They are also hoping it will trigger a resumption of the downtrend in the U.S. Dollar and increased demand for dollar-denominated gold.

Bearish traders aren’t confident in the stimulus package moving quickly through the divided Congress. Furthermore, increasing demand for riskier assets could keep a lid on prices. Rising Treasury yields could also limit any gains in gold. Yields could go up since the Treasury will have to sell more bonds to pay for the stimulus package. In order to get the money it needs, the Treasury will have to offer higher rates.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1966.80 will change the main trend to up. A move through $1821.30 will signal a resumption of the downtrend with $1771.30 the next target.

The minor trend is up. This means momentum has shifted to the upside. A trade through $1821.30 will change the minor trend to down.

The longer-term range is $1467.00 to $2107.60. Its retracement zone at $1787.30 to $1711.70 is major support.

The short-term range is $1966.80 to $1821.30. Its retracement zone at $1894.10 to $1911.20 is the next potential upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

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Short-Term Outlook

Traders are still waiting for a catalyst to move this market in a big way in either direction.

A break into the major support zone at $1787.30 to $1711.70 is likely to draw the attention of longer-term buyers.

However, we really can’t think about a bullish move until the pattern of lower tops is broken with conviction. The last lower top comes in at $1966.80.

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

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