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James Hyerczyk

Gold futures hit their lowest level since September 28 on Wednesday as demand for the safe-haven U.S. Dollar weighed on the dollar-denominated asset. The dollar was helped by a plunge in the Euro, which fell to a one-week low on prospects of a national lockdown in Germany and France as coronavirus cases surged, with implied volatility gauges in the common currency and the yen hitting multi-month highs as traders positioned for next Tuesday’s U.S. election.

At 14:35 GMT, December Comex Gold futures are trading $1876.30, down $35.60 or -1.86%.

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The sell-off is also being fueled by a steep drop in U.S. equity markets, which fell on Wednesday, following weakness in Europe, as investors worried that the latest increase in coronavirus infections could halt the global economic recovery.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Wednesday when sellers took out a pair of main bottoms at $1885.00 and $1877.10. A trade through $1936.00 will change the main trend to up.

The minor trend is also down. A trade through $1913.00 will change the minor trend to up. This will shift momentum to the upside.

The market is currently testing a major retracement zone at $1889.70 to $1842.60. Inside this range is another main bottom at $1851.00.

The short-term range is $1983.80 to $1851.00. Its 50% level at $1917.40 is potential resistance.


Short-Term Outlook

The downside momentum could get stronger on a sustained move under $1877.10. This could extend the selling into the next main bottom at $1851.00, followed by the Fibonacci level at $1842.60.

Overcoming $1889.70 will indicate the selling is getting weaker, or the short-covering is getting stronger. If this leads to a turnaround in the intraday momentum then look for the counter-trend rally to possibly extend into the minor top at $1913.80, followed by the short-term 50% level at $1917.40.

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