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James Hyerczyk

Gold futures edged higher on Wednesday, helped by a slight rebound in silver prices. Putting a lid on gold prices, however, was a rise in Treasury yields and steady demand for higher-risk equities.

The fundamentals weren’t particularly supportive. Bullish traders eyed strong demand for gold and silver coins as one reason to buy the precious metal. But the bears were pointing toward an improving economy and the strong possibility of a Biden stimulus plan as two reasons to look for lower prices.

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At 21:48 GMT, April Comex gold is trading $1835.30, up $1.90 or +0.10%.

On Wednesday, ADP reported stronger than expected results in its January private sector jobs report. This should please the Fed since it said job growth is the key to a successful economic recovery.

Meanwhile, bond traders betting on the passing of the Biden coronavirus relief bill, drove Treasury yields higher. This weighed on gold prices since the precious metal doesn’t pay interest.

Daily April Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out the previous day’s low. A trade through $1878.90 will change the main trend to up.

The main range is $1771.30 to $1966.80. The gold market is currently trading on the weak side of its retracement zone at $1869.10 to $1846.00, putting it in a bearish position.

The short-term range is $1966.80 to $1804.70. If buyers take out $1878.90 then its retracement zone at $1885.80 to $1904.90 will become the primary upside target.


Short-Term Outlook

A sustained move under the main Fibonacci level at $1846.00 should keep the downside pressure on prices. The daily chart indicates there is no visible support between Wednesday’s low at $1830.10 and the January 19 bottom at $1804.70.

Taking out $1804.70 is likely to lead to further weakness with a long-term 50% level at $1787.30 the primary target price.

Overtaking $1846.00 will signal the presence of buyers. This could trigger a further rally into the main 50% level at $1869.10.

While crossing to the strong side of the 50% level could create a bullish tone, any rally is likely to be labored until buyers can clear out the main top at $1878.90, the short-term 50% level at $1885.80 and the short-term Fibonacci level at $1904.90.

For a look at all of today’s economic events, check out our economic calendar.

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