Gold Price Futures (GC) Technical Analysis – Confirmation of Closing Price Reversal Top Could Shift Momentum.

Gold futures settled lower after hitting a new contract high early in the session on Wednesday as investors booked profits in reaction to the selling of other asset classes as a global rise in coronavirus cases led a flight into the more liquid U.S. Dollar.

At 19:54 GMT, August Comex gold is trading $1776.70, down $5.30 or -0.30%. This is down from a high of $1796.10.

Although often called a “safe-haven” asset, gold is really an investment. Other factors that may have contributed to the market’s weakness were margin call selling related to the earlier plunge in global equity markets, higher demand for the true safe-haven Treasury bonds and a stronger U.S. Dollar against a basket of major currencies.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. This was confirmed earlier in the session when buyers took out the previous contract high at $1789.00. The main trend will change to down on a trade through $1671.70.

The minor trend is also up. A trade through $1706.20 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is $1671.70 to $1796.10. Its 50% level or pivot at $1733.90 is the nearest support. Since the main trend is up, buyers could show up on a test of this level.

Short-Term Outlook

Following the prolonged move up in terms of price and time, gold formed a closing price reversal top on Wednesday. The chart pattern doesn’t mean the trend is changing to down, but it does indicate the selling is greater than the buying at current price levels.

If confirmed on Thursday, the move could trigger the start of a 2 to 3 day correction, or at least a 50% correction of the last rally from $1671.70 to $1796.10. This would make $1733.90 the primary downside target.

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