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James Hyerczyk
Comex Gold and Dollar

Gold futures are edging lower early Monday on increasing hopes the United States and China are close to signing “phase one” of a trade deal between the two economic powerhouses. Gold began to weaken late last week after a pair of high-ranking U.S. officials said the two parties were close to an agreement.

That assessment was further strengthened over the weekend after Chinese state media Xinhua reported Washington and Beijing had a high-level phone call on Saturday and that the two sides discussed each other’s core issues for the first phase of an initial trade agreement.

At 06:58 GMT, December Comex gold is trading $1465.10, down $3.40 or -0.23%.

Not everyone is optimistic, which may be why gold prices aren’t breaking sharply. Some analysts cite the lack of concrete details as one reason to remain cautious. “To be blunt, such rhetoric is more or less the same as Steven Mnuchin (who) said months ago that a deal was ‘99% done’, “Commerzbank analysts wrote in a note to clients, though they acknowledged the comments had benefited sentiment.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1446.20 will signal a resumption of the downtrend. The main trend changes to up on a move through the October 10 main top at $1522.30.

A move through last week’s high at $1475.50 will indicate the return of buyers.

The minor range is $1446.20 to $1475.50. Its 50% level or pivot comes in at $1460.90. Aggressive counter-trend buyers could come in on a test of this level. They will be trying to form a secondary higher bottom.

Another minor range is $1519.00 to $1446.20. Its 50% level at $1482.60 is potential resistance.

The main range is $1412.10 to $1566.20. Its retracement zone at $1471.00 to $1489.20 is controlling the near-term direction of the market.

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Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $1465.10, the direction of the December Comex gold futures contract the rest of the session on Monday is likely to be determined by trader reaction to the main Fibonacci level at $1471.00.

Bearish Scenario

A sustained move under $1471.00 will indicate the presence of sellers. The first downside target is the minor pivot at $1460.90. If this level fails then look for the selling to possibly extend into the main bottom at $1446.20.

Bullish Scenario

Overtaking and sustaining a rally over $1471.00 will signal the presence of buyers. The next resistance levels are layered at $1475.50, $1482.60 and $1489.20. The latter is a potential trigger point for an acceleration to the upside.

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