Gold Price Futures (GC) Technical Analysis – Capped by Higher Yields, Underpinned by Recession Worries

Gold futures are edging higher on Thursday as traders continue to digest yesterday’s 75-basis point rate hike by the Federal Reserve and post-announcement commentary from Fed Chair Jerome Powell. Gains are being capped by higher Treasury yields and a firm U.S. Dollar.

At 09:29 GMT, August Comex gold is trading $1834.10, up $14.50 or +0.80%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $170.79, up $2.22 or +1.32%.

The market rallied on Wednesday because the Fed rate hike was widely expected. The new concerns for traders are how aggressive the Fed will be with future rate hikes in July and August and whether the economy can withstand those rate hikes.

Powell seems to think the economy and labor market are strong enough to withstand future rate hikes, but wasn’t sure about the size of potential rate hikes in July or September. He also emphasized that future hikes will be data dependent.

That being said, over the near-term, gold is likely to be capped by higher yields and a stronger dollar, but it will also be supported by any weakness in the economy.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1806.10 will signal a resumption of the downtrend. A move through $1882.50 will change the main trend to up.

The market is currently testing a minor retracement zone at $1837.30 to $1826.60.

Resistance levels are $1844.00 and $1854.80. The most important level is the long-term Fibonacci level at $1844.00.

Daily Swing Chart Technical Forecast

Trader reaction to the minor Fibonacci level at $1826.60 is likely to determine the direction of the August Comex gold futures contract on Thursday.

Bullish Scenario

A sustained move over $1826.60 will indicate the presence of buyers. This could lead to a labored rally with potential resistance at $1837.30, $1844.00 and $1854.80. The latter is a potential trigger point for an acceleration into the main top at $1882.50.

Bearish Scenario

A sustained move under $1826.60 will signal the presence of sellers. This could trigger an acceleration into the minor bottom at $1806.10. If this price fails then look for a possible break into the support cluster at $1792.00 – $1787.80.