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James Hyerczyk
Comex Gold
Comex Gold

Gold posted a wicked two-sided trade on Friday before closing lower. The market opened firm amid weakness in the U.S. Dollar, but that move quickly failed and the market plunged on renewed concerns about an escalation of the trade war between the United States and China. Traders may have also been responding to expectations of higher interest rates with the U.S. Federal Reserve widely expected to raise its benchmark interest rate by 25 basis points on Wednesday, September 26.

December Comex Gold settled at $1201.30, down $10.00 or -0.83%.

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Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down when sellers took out the last swing bottom at $1197.50 on Friday. The new main top is $1215.80. A trade through this level will change the main trend to up.

The main range is $1244.70 to $1167.10. Its retracement zone at $1205.90 to $1215.10 is resistance. This zone has rejected rallies numerous times since late August.

The short-term range is $1167.10 to $1220.70. Its retracement zone at $1193.90 to $1187.50 is the next downside target. It has been providing support since late August.

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Daily Swing Chart Technical Forecast

Based on the close at $1201.30 and Friday’s price action, the direction of the December Comex Gold futures contract is likely to be determined by trader reaction to the short-term 50% level at $1193.90.

Despite the change in trend to down, a sustained move over $1193.90 is likely to indicate the presence of buyers. If this move creates enough upside momentum then look for a test of the 50% level at $1205.90. The rally could extend if this level is taken out with targets coming in at $1215.10, $1215.80 and $1218.00.

Taking out $1193.90 will signal the presence of sellers. Taking out $1192.70 will reaffirm the downtrend. This could trigger a further break into a main bottom at $1189.50, followed by the Fibonacci level at $1187.50.

The daily chart opens up to the downside under $1187.50. The chart indicates there is room to run with the main bottom at $1167.10 the next major target. Selling volume is going to have to increase substantially, however, in order to trigger an acceleration to the downside.

The catalyst behind early weakness on Monday could be the news that China cancelled its upcoming trade talks with the United States. This could lead to a “risk off” scenario which would make the U.S. Dollar a more attractive investment while putting pressure on dollar-denominated gold.

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