Gold Price Futures (GC) Technical Analysis – Aggressive Fed Rate Hike Fears Capping Gains

Gold futures are edging higher early Monday on low volume as traders continued to assess the impact of the May U.S. Non-Farm Payrolls report on future Fed rate hikes. Following a steep sell-off on Friday, the price action suggests the robust U.S. jobs data signals more interest rate increases this year.

At 06:39 GMT, August Comex gold futures are trading $1856.40, up $6.20 or +0.34%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $172.60, down $1.75 or -1.00%.

Gold fell on Friday after data showed U.S. employers hired more workers than expected in May and maintained a fairly strong pace of wage increases.

The market is currently pricing in two 50-basis point rate hikes in June and July from the Fed. The jobs data strongly suggests there will be more.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside, following Friday’s closing price reversal top.

A trade through $1878.60 will negate the chart pattern and signal a resumption of the uptrend. A move through $1849.70 will confirm the reversal top. This won’t change the trend, but it could signal the start of a 2-3 day correction. The main trend will change to down if sellers take out $1830.20.

The market is currently straddling a minor pivot at $1854.80. The support is the long-term Fibonacci level at $1844.00, followed by another pivot at $1835.30.

On the upside, the resistance is a pair of 50% levels at $1890.00 and $1900.30.

Daily Swing Chart Technical Forecast

Trader reaction to $1854.80 early Monday is likely to determine the direction of August Comex gold.

Bearish Scenario

A sustained move under $1854.80 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into $1844.00.

Look for buyers on the first test of $1844.00. If this fails then look for a break into $1835.30, followed by $1830.20. This is a potential trigger point for an acceleration to the downside with the next major targets $1792.00 and $1787.80.

Bullish Scenario

A sustained move over $1854.80 will signal the presence of buyers. If this generates enough upside momentum then look for a surge into the main top at $1878.60.

Taking out $1878.60 will reaffirm the uptrend with the next key targets $1890.00 to $1900.30.