Gold Price Futures (GC) Technical Analysis – Challenging Long-Term Fibonacci Level at $1272.30

February Comex Gold futures finished lower on Thursday. The main trend turned down when the market crossed the last swing bottom at $1274.40. The new main top is $1303.40. The catalysts behind the sell-off were rising U.S. Treasury yields and increased demand for higher-yielding assets.

If sellers continue to increase their pressure then we could see tests of the October 27 main bottom at $1268.10 and the October 6 main bottom at $1267.00.

If the $1267.00 main bottom fails as support then the gold market could stair step down with potential targets the August 8 main bottom at $1261.00 and the July 26 main bottom at $1253.50.

The gold market will begin to accelerate to the downside under $1253.50 with the next target the July 14 main bottom at $1225.10, followed closely by the July 10 main bottom at $1214.50.

The main range is $1214.50 to $1365.80. Its retracement zone is $1290.20 to $1272.30. Gold has been straddling this zone since early October, making several attempts to breakout to the upside and several attempts to breakout to the downside.

Thursday’s close finished inside this zone, closing in a position to breakout to the downside under the Fibonacci level at $1272.30. This zone is controlling the longer-term direction of the gold market.

Traders have a couple of choices at current price levels. They can use the retracement zone to position themselves for a longer-term move, for example, long over the 50% level at $1290.20 and short under the 61.8% level at $1272.30.

Traders can also continue to react to the short-term swings, buying when buyers take out a swing top and selling when sellers take out a swing bottom. This may lead to a series of small losses, which is the nature of swing trading, until there is enough momentum and volume to sustain a move.

At this time, with the swing chart down, it looks like selling weakness under the Fib level at $1272.30 may be the way to go.