Gold Price Futures (GC) Technical Analysis – Could Be Setting Up for $60 Break Under $1461.30

Gold prices plunged on Monday after the U.S. Dollar hit multi-year highs, making the dollar-denominated metal more expensive for foreign investors. So-called safe-haven buyers likely bailed out of their positions, triggering a slew of sell stops, as once again that trading strategy failed to yield any fruit.

Throughout the year, we’ve seen gold investors burned several times chasing the headlines. Each time, gold has rebounded, but those moves have been fueled by the thought of aggressive rate cutting by the central banks, especially the Fed.

At this time, the dollar is the safe-haven asset. Furthermore, talk that the Fed may hit the pause button on a third rate cut at the end of October could be the first sign that other central bank’s may pullback back on the aggressive monetary policy strategy and try to get their respective governments to provide fiscal stimulus.

On Monday, December Comex gold settled at $1472.90, down $33.50 or -2.22%. For the month, the December futures contract closed $56.50 lower or -3.69%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Monday when sellers took out the previous main bottom at $1490.70. The main trend will change to up on a trade through $1543.30.

The market is currently trading inside a series of retracement levels, which could determine the next major move in the market.

The main range is $1396.40 to $1566.20. Its retracement zone is $1481.30 to $1461.30.

The intermediate range is $1412.70 to $1566.20. Its retracement zone is $1489.20 to $1471.00.

These levels form a potential support cluster at $1481.30 to $1471.00. The market closed at $1472.90, inside this zone.

Daily Swing Chart Technical Forecast

Based on Monday’s price action and the close at $1472.90, the direction of the December Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the intermediate Fibonacci level at $1471.00.

Bearish Scenario

A sustained move under $1471.00 will indicate the presence of sellers. This could trigger a break into the main Fibonacci level at $1461.30.

The daily chart is wide open under $1461.30 so don’t be surprised by another acceleration to the downside. The next major target is $1412.10, followed by the July 1 bottom at $1396.40.

Bullish Scenario

Holding above $1471.00 will signal the presence of buyers. This could trigger a labored rally with targets at $1481.30 and $1489.20.

The trigger point for a breakout to the upside is $1489.20. If this move gains traction then look for a retest of $1518.40.