Gold Price Futures (GC) Technical Analysis – Could Be Setting Up For Steep Decline Under $1453.10

Gold futures traded lower on Wednesday, pressured by increased demand for risky assets. The major stock indexes rose to record highs. Treasury yields also moved higher, helping to make the U.S. Dollar a more attractive asset. The stronger greenback dampened foreign demand for dollar-denominated gold.

Boosting risk appetite was hope that the United States and China would soon reach an initial trade deal. Also bolstering prices was solid U.S. economic data, which once again confirmed the resiliency of the economy.

At 20:30 GMT, February Comex gold is trading $1461.00, down $6.40 or -0.44%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1453.10 will reaffirm the downtrend. The main trend will change to up on a trade through $1486.00.

The main range is $1418.90 to $1571.70. Its retracement zone at $1477.30 to $1495.30 is controlling the near-term direction of the market. It’s also resistance. Trading on the weak side of this zone is helping to generate the current downside bias.

A short-term range is $1525.20 to $1453.10. Its 50% level at $1489.10 is also resistance. It falls inside the main retracement zone.

Short-Term Outlook

On November 26, gold formed a closing price reversal bottom. Counter-trend buyers probably came in to defend the $1453.10 main bottom. A trade through $1470.00 will confirm the reversal bottom. This won’t change the trend to up, but it could lead to a 2 to 3 day counter-trend rally.

Over the near-term, the key level to watch is $1453.10. This is a potential trigger point for an acceleration to the downside. The daily chart shows there is plenty of room to the downside with the main bottom at $1418.90 the next major downside target.

Side Notes

Gold is going to have a hard time sustaining a rally if the big three – the dollar, Treasury yields and stocks continue to rise. We could see a few counter-trend rallies over the near-term, but they’re likely to create fresh shorting opportunities unless the narrative about a potential U.S.-China trade deal turns negative.