Gold Price Futures (GC) Technical Analysis –

Comex gold futures rose on Monday, erasing early losses as the U.S. Dollar retreated from a two-week peak reached last Friday. The strong performance in the U.S. equity markets helped dampen the dollar’s appeal as a safe-haven asset, while making dollar-denominated gold more attractive to foreign buyers.

Despite the gains on Monday, gold is down about 10% from a record peak hit in August, putting it in correction territory. The metal posted its biggest weekly decline since March 13 on Friday so it was probably overdue for a technical bounce, but based on recent price action, it wasn’t going to do it without a break in the U.S. Dollar Index.

At 08:50 GMT, December Comex gold futures are trading $1886.70, up $20.40 or +1.09%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside on Monday when buyers confirmed the closing price reversal bottom from September 24.

A trade through $1851.00 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a trade through $1983.80.

As you can see, confirmation of a closing price reversal bottom doesn’t change the main trend to up, but it does shift momentum to the upside. This often leads to the start of a 2 to 3 day counter-trend rally or a minimum 50% correction of the last swing down.

The main range is $1690.10 to $2089.20. The market is currently trading inside its retracement zone at $1889.70 to $1842.60. This zone is controlling the near-term direction of the market.

The minor range is $1983.80 to $1851.00. Its 50% level at $1917.40 is the first upside target.

The short-term range is $2089.20 to $1851.00. Its retracement zone at $1970.10 to $1998.20 is a major upside target zone. The last main top at $1983.80 is inside this retracement zone.

Short-Term Outlook

Based on Monday’s price action, the direction of the December Comex gold market over the short-run is likely to be determined by trader reaction to the main 50% level at $1889.70. This is a potential trigger point for a surge into the minor pivot at $1917.40.

We could see sellers on the first test of $1917.40. However, it’s also a trigger point for an acceleration into the short-term retracement zone at $1970.10 to $1998.20.

The inability to follow-through to the upside will indicate the presence of sellers. This could lead to a retest of $1851.00 to $1842.60. If this area fails then look for the start of a steep break.