Gold Price Futures (GC) Technical Analysis – Breakout Over $1802.80 Targets $1821.50 – $1831.10
Gold futures are rangebound but climbing on Tuesday which suggests a volatile move is coming. Support is being provided by a lower Treasury yields and a weaker dollar.
The catalysts driving the intraday rally are comments from Moderna’s CEO Stephane Bancel who told the Financial Times that COVID-19 vaccines were likely to be less effective against the Omicron variant, putting bullion on course for a second straight monthly gain.
At 14:57 GMT, February Comex gold futures are trading $1804.80, up $19.60 or +1.10%.
In addition to being a risk-off session, investors are also betting that an ineffective vaccine could slow-down the Fed’s tapering plans and delay its first rate hike.
Meanwhile, financial market traders have already pushed back their expectation of a first, full 25 basis-point rate hike to September 2022, versus July last week. This is also underpinning gold prices.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has been trending lower since the confirmation of the closing price reversal top on November 16.
A trade through $1881.90 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $1761.00 will change the main trend to down.
The minor trend is also down. A trade through $1780.20 will change the minor trend to down. This will confirm the shift in momentum.
The major support zone is $1781.00 to $1757.10. The upper or 50% level at $1781.00 has been providing support for five straight sessions.
The market is currently trading on the strong side of a 50% level at $1802.80, making it support.
The first resistance is a 50% level at $1821.50. The minor range is $1881.90 to $1780.20. Its 50% level at $1831.10 is the primary upside target.
Daily Swing Chart Technical Forecast
The direction of the February Comex gold futures contract on Tuesday is likely to be determined by trader reaction to $1802.80.
A sustained move over $1802.80 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the pair of 50% levels at $1821.50 and $1831.10.
Aggressive counter-trend sellers could come in on a test of $1821.50 to $1831.10. They will be trying to produce a potentially bearish secondary lower top.
A sustained move under $1802.80 will signal the presence of sellers. If this creates enough downside momentum then look for a retest of $1781.10 – $1780.20.
Taking out $1780.20 could trigger an acceleration into the main bottom at $1761.00, followed by the major Fibonacci level at $1757.10.