Gold Price Futures (GC) Technical Analysis – $1899.20 Upside Target, $1799.30 Downside Objective
Gold futures are edging higher on Wednesday due to a weaker U.S. Dollar and a slight dip in U.S. Treasury yields as investors position themselves ahead of a Federal Reserve meeting that could offer hints on tapering of economic support measures.
At 05:40 GMT, August Comex gold futures are trading $1861.80, up $5.40 or +0.29%.
The Fed is expected to acknowledge the first conversations among its policymakers on when and how fast to pare back the massive bond-buying program launched in 2020 at its policy meeting later in the day at 18:00 GMT.
Recent data showing a spike in U.S. consumer prices have raised concerns over rising inflation. But, Fed officials have said rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time.
The mention of tapering may have already been priced into the gold market, given this week’s steep sell-off so traders should be prepared for a possible counter-trend move. But if the Fed reveals more than traders anticipated, prices could sell-off sharply.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1845.70 will signal a resumption of the downtrend. A move through $1906.90 will change the main trend to up.
The minor trend is also down. A trade through $1906.20 will change the minor trend to up. This will also shift momentum to the upside.
The short-term range is $1810.70 to $1919.20. Its 50% level at $1865.00 is the nearest resistance.
The minor range is $1919.20 to $1845.70. Its 50% level at $1882.50 is the second potential resistance level.
The major resistance is the long-term 50% level at $1899.20.
On the downside, potential support is a series of 50% levels at $1838.00, $1822.40 and a price cluster at $1799.30 to $1798.80.
Daily Swing Chart Technical Forecast
The direction of the August Comex gold futures contract on Wednesday is likely to be determined by trader reaction to the 50% level at $1865.00.
Bearish Scenario
A sustained move under $1865.00 will indicate the presence of sellers. The first downside target is this week’s low at $1845.70, followed by a 50% level at $1838.00.
If $1838.00 fails then look for the selling pressure to continue into another 50% level at $1822.40, followed by the main bottom at $1810.70 and the support cluster at $1799.30 to $1798.80. We’re looking for buyers to come in if the support cluster is tested. This is a value area.
Bullish Scenario
A sustained move over $1865.00 will signal the presence of buyers. This could trigger a surge into a 50% level at $1882.50. Since the main trend is down, sellers could come in on the first test of this level. Overtaking it could trigger another surge into the major 50% level at $1899.20.
Overcoming $1899.20 will indicate the buying is getting stronger. This could lead to a breakout over $1906.90, a change in trend to up and a test of the recent main top at $1919.20.
