Gold Price Futures (GC) Technical Analysis – After Building Support Base, May Be Ready to Challenge $1489.10 to $1495.30

Gold futures finished lower on Friday as a slew of positive U.S. economic reports drove U.S. Treasury yields higher, making the U.S. Dollar a more attractive asset, while lowering demand for dollar-denominated gold. The reports also reduced the chances of a near-term rate cut by the U.S. Federal Reserve. Another surge to record highs in the stock market also weighed on demand for lower-yielding gold.

On Friday, February Comex gold settled at $1480.90, down $3.50 or -0.24%.

Low volume during this holiday-shortened week could make trading difficult by creating the illusion of breakout moves so be careful chasing the market higher or lower.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1491.60 will signal a resumption of the uptrend. A move through $1463.00 will change the main trend to down.

Due to the tight trading range over the past five weeks, we’re not too interested in the minor trend.

From the bottom up, the short-term range is $1453.10 to $1491.60. Its retracement zone at $1472.30 to $1467.80 is potential support.

The next potential support is a major Fibonacci level at $1477.30.

From the top down, the main range is $1525.20 to $1453.10. Its 50% level at $1489.10 is potential resistance. The next potential resistance is a major Fibonacci level at $1495.30. This is a potential trigger point for an acceleration to the upside with the next target zone $1512.40 to $1526.40.

Daily Swing Chart Technical Forecast

Based on last week’s price action and Friday’s close at $1480.90, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the main Fibonacci level at $1477.30.

Bullish Scenario

A sustained move over $1477.30 will indicate the presence of buyers. If this move generates enough upside momentum then look for a potential rally into a 50% level at $1489.10, followed closely by minor top at $1491.60 and a 50% level at $1495.30.

Bearish Scenario

A sustained move under $1477.30 will signal the presence of sellers. This could create a labored break with potential support levels lined up at $1474.30, $1472.30 and $1467.80.

Side Notes

Low volume could make trading difficult this week. The major players are likely to be on the sidelines and news is expected to be scarce. Computer algorithms may dominate the trade. Be careful chasing the market.