Gold Price Futures (GC) Technical Analysis – Breakout Over $1595.50 Could Trigger Acceleration into $1619.60

Gold closed higher on Friday as concerns of an economic slowdown arising from the coronavirus outbreak kept the precious metal underpinned. Helping to generate the support was another plunge in U.S. Treasury yields and a steep drop in the U.S. Dollar against a basket of major currencies. Both helped drive up foreign demand for dollar-denominated gold.

On Friday, April Comex gold settled at $1587.90, down $1.30 or -0.08%.

In the U.S., the benchmark 10-year Treasury yield posted its biggest monthly drop since August as the deadly coronavirus fanned recession fears. Stocks also fell sharply on Friday, wiping out the Dow Jones Industrial Average’s gain for January.

Over the weekend, China said the coronavirus death toll hit 304, as confirmed cases crossed 14,000.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers inched through the previous main top at $1594.70. The main trend will change to down on a trade through the nearest main bottom at $1567.90.

The main range is $1458.50 to $1619.60. Its retracement zone at $1539.10 to $1520.00 is the main support area.

The intermediate range is $1619.60 to $1542.80. Its retracement zone at $1581.20 to $1590.30 is potential resistance. The market closed inside this zone on Friday.

The short-term range is $1542.80 to $1595.50. Its 50% level at $1569.10 is support.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $1587.90, the direction of the April Comex gold futures contract on Monday is likely to be determined by trader reaction to the intermediate Fibonacci level at $1590.30.

Bullish Scenario

A sustained move over $1590.30 will indicate the presence of buyers. Overtaking Friday’s high at $1595.50 will indicate the buying is getting stronger. If this move is able to create enough upside momentum then look for the rally to possibly sure into the January 8 main top at $1619.60.

Bearish Scenario

A sustained move under $1590.30 will signal the presence of sellers. The first downside target is a 50% level at $1581.20. Watch for buyers on the first test. If it fails then look for a plunge into $1569.10 to $1567.90.

Taking out $1567.90 will change the main trend to down. It could also trigger an acceleration to the downside with the first target a minor bottom at $1552.10, followed by a main bottom at $1542.80 and the major 50% level at $1539.10.