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James Hyerczyk
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Comex Gold

Gold futures are trading lower on Monday after giving up earlier gains. The price action looked promising for the bulls shortly after the pre-market opening, but the buying wasn’t strong enough to sustain a rally over our key level at $1711.70. The about face in the market has put gold in a position to challenge last week’s low at $1683.00. Driving the direction of the market so far today are stronger Treasury yields and a surge in the U.S. Dollar.

At 09:22 GMT, April Comex gold is trading $1688.20, down $10.30 or -0.61%.

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We were a little optimistic before the opening today because of a slight divergence we saw on Friday. The move is still intact, but the odds of success for a turnaround are looking bleak.

The best case scenario for bullish traders today will be a reversal to the upside in June 10-year U.S. Treasury notes and a reversal to the downside by the U.S. Dollar. Both reversals would trigger a rapid turnaround in gold prices.

Ultimately, the direction of the gold market hinges upon the direction of U.S. Treasury yields.

Daily April Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1683.00 will signal a resumption of the downtrend.

The main trend changes to up on a trade through $1815.20. This is highly unlikely, but the market is down nine sessions from that top, putting it inside the window of time for a potentially bullish closing price reversal bottom.

The minor range is also down. Taking out $1739.10 will change the minor trend to up. This will shift momentum to the upside.

The market is currently trading on the bearish side of a major retracement zone at $1711.70 to $1787.30. This zone is controlling the longer-term direction of the gold market. It is now resistance.

The minor range is $1815.20 to $1683.00. Its 50% level at $1749.10 is potential resistance.

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Daily Swing Chart Technical Forecast

The direction of the April Comex gold futures market on Monday will be determined by trader reaction to $1698.50.

Bearish Scenario

A sustained move under $1698.50 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to extend into last week’s low at $1683.00. If this level fails as support then look for a test of the April 21, 2020 main bottom at $1679.60.

The main bottom at $1679.60 is a potential trigger point for an acceleration to the downside with the April 1, 2020 bottom at $1594.00 the next likely target.

Bullish Scenario

A sustained move over $1698.50 will signal the presence of buyers. This could trigger a rally into the main Fibonacci level at $1711.70. This is a potential trigger point for an acceleration to the upside with the next targets the minor top at $1739.10, followed by the minor 50% level at $1749.10.

Side Notes

A close over $1698.50 will form a potentially bullish closing price reversal top. If confirmed, look for the start of a 2 to 3 day counter-trend rally with potential upside targets 50% levels at $1749.10 and $1787.30.

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