Based on the early price action, the direction of February Comex gold the rest of the session is likely to be determined by trader reaction to $1270.30.
Gold futures are trading higher on Monday, helped by a weaker U.S. Dollar and a drop in U.S. Treasury yields. Heightened volatility in the stock market is helping to drive investors into safe-haven assets like Treasurys, the Japanese Yen and gold. The catalyst behind the rally seems to be concerns over the U.S. government shutdown and worries about a global economic slowdown.
At 1523 GMT, February Comex gold futures are trading $1270.30, up $12.00 or +0.95%.
The main trend is up according to the daily swing chart. A trade through $1270.30 will reaffirm the uptrend. This could trigger an acceleration to the upside. The main trend will change to down on a trade through $1236.50.
The minor trend is also up. The minor trend will change to down on a move through $1245.30.
The short-term range is $1236.50 to $1270.30. Its 50% level or pivot at $1253.40 is new support.
Additional support is the intermediate retracement zone at $1243.60 to $1237.20.
Based on the early price action, the direction of February Comex gold the rest of the session is likely to be determined by trader reaction to $1270.30.
Taking out $1270.30 will indicate the buying is getting stronger. If this move generates enough upside momentum then look for a potential surge into the July 9 top at $1284.10.
The inability to overcome and sustain a rally over $1270.30 will signal the presence of sellers. If this creates enough downside momentum then look for a possible sell-off into the short-term pivot at $1253.40.
The current chart pattern looks bullish with plenty of room to the upside. The only pattern that could stop the rally would be a lower close.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.