Gold prices are trading mixed early Friday with the U.S. Dollar continuing to influence its direction. Gold traders are trying to decide once again whether it is an investment or a safe-haven asset. Gold should weaken if it is treated like an investment because rising U.S. interest rates will make it a less-desirable asset. Gold should rally if investors decide to treat it like a safe-haven asset while spurring the U.S. Dollar. I don’t think you can have both the dollar and gold assume the role of safe-haven asset.
At 0600 GMT, December Comex Gold is trading $1215.40, up $0.40 or 0.03%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A new main bottom has been formed at $1196.60. A trade through this level will change the main trend to down. The formation of a secondary higher bottom at $1196.60 is a potentially bullish development. A trade through $1246.00 will signal a resumption of the uptrend.
The minor trend is down. It turned down recently when sellers took out the swing bottom at $1213.40. This move shifted momentum to the downside.
The main range is $1167.10 to $1246.00. Its retracement zone at $1206.60 to $1197.20 is providing support. It stopped the rally at $1196.60 earlier in the week.
Major retracement levels at $1222.70, $1235.80 and $1246.30 are potential resistance and breakout levels. The 50% level at $1246.30 stopped the rally at $1246.00 on October 26.
The short-term range is $1246.00 to $1196.60. Its retracement zone at $1221.30 to $1227.10 is the first upside target. The 50% levels at $1221.30 to $1222.70 form a resistance cluster. Look for aggressive counter-trend sellers on the first test of this area.
Daily Swing Chart Technical Forecast
Given the current price at $1215.60, the gold market can move in either direction. We’re looking for heightened volatility since the market is being news driven. There is also a brewing clash between momentum traders and trend traders.
If buyers take control then look for a possible rally into the resistance cluster at $1221.30 to $1222.70. Look for sellers on the first test. A breakout over $1222.70 could trigger a rally into the short-term Fib at $1227.10. This is a potential trigger point for an acceleration into $1235.80.
If sellers take control then look for a possible retest of $1206.60 to $1197.20.