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James Hyerczyk
Comex Gold and U.S. Dollar

Gold futures surged to a multi-year high on Friday, boosted by expectations of a rate cut by the U.S. Federal Reserve at its next meeting in late July. Earlier in the week, the Fed gave strong indications that it could cut its benchmark rate later this year, however, it didn’t indicate when.

Financial market traders felt differently. Driving the benchmark 10-year Treasury yield below 2-percent, and indicating the chances of a Fed rate cut on July 31 are now at 100%. This made the U.S. Dollar a less-attractive investment while driving up demand for dollar-denominated gold.

On Friday, August Comex gold futures settled at $1400.10, up $3.20 or +0.23%.

Daily August Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the contract high at $1413.30, driving the market into $1415.40 before intraday sellers took control.

A trade through 1415.40 on Monday will signal a resumption of the uptrend. The trend will change to down on a move through $1323.60.

If the new short-term range becomes $1323.60 to $1415.40 then look for a potential pullback into its retracement zone at $1369.50 to $1358.70.

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Daily Swing Chart Technical Forecast

Upside momentum is strong, but according to the Nearby Gold futures chart, potential resistance levels are lined up from $1417.30 to $1457.90. This are all previous main tops on the daily chart.

The resistance is tight between $1417.30 and $1420.70. Prices could start expanding over $1420.70 with $1430.50 the next target. Prices are likely to continue to expand with additional targets $1437.20, $1447.10 and $1457.90.

Although these prices could become resistance, the best sign of a top will be a closing price reversal.

The rally will continue if traders have no problem buying strength. This is likely to occur if the U.S. Dollar continues to plunge against a basket of currencies.

If traders decide that buying strength is not a good idea, or the dollar makes a strong recovery, then gold prices could pull back into the short-term retracement zone at $1369.50 to $1358.70.

At this point in the rally, it comes down to chasing prices higher, or waiting for a return to a value zone.

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