Gold Price Futures (GC) Technical Analysis – Best Near-Term Value Area is $1889.70 to $1842.60

Gold futures are under pressure on Tuesday on a strong dollar but the precious metal did find some support, buoyed by lingering economic concerns as investors awaited policy cues from the European Central Bank (ECB).

The U.S. Dollar Index rose on Tuesday after the Euro weakened, following a report that showed the Euro Zone economy declined by slightly less than initially estimated in the second quarter, but the drop was still the sharpest ever as consumer spending caved in due to COVID-19 restrictions.

At 12:14 GMT, December Comex gold is trading $1921.90, down $12.40 or -0.64%.

Gold has been tracking the Euro lower for about a week after the Euro Zone reported negative inflation and ECB policymakers expressed concerns over the overvalued Euro.

Gold could face some near-term headwinds if the ECB decides on Thursday to announce additional stimulus measures, while the Fed agrees to hold policy steady.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The main trend will change to down on a trade through $1908.40. A move through $2001.20 will signal a resumption of the uptrend.

The minor range is $1908.40 to $2001.20. Its 50% level or pivot at $1954.80 is resistance.

The short-term range is $2089.20 to $1874.20. Its retracement zone at $1981.70 to $2007.10 is an even stronger resistance area.

The main retracement zone support is $1889.70 to $1842.60. This zone stopped the selling at $1874.20 on August 12.

Daily Swing Chart Technical Forecast

Today’s price action is being driven by outside market headlines that are encouraging weak buyers to dump their long positions.

If the downside momentum continues then look for a break into the main bottom at $1908.40. If this fails as support then look for the selling to extend into the main 50% level at $1889.70. Buyers could come in on the first test.

If there is a short-covering rally late in the session then look for a possible test of the minor pivot at $1954.80. Upside momentum could pick up if buyers can overcome this level.

Side Notes

The longer-term uptrend remains intact, however, prices are likely to continue to move lower until gold hits a value area attractive enough to entice longer-term investors to add to their bullish positions.