Gold Price Futures (GC) Technical Analysis – Erases Earlier Losses after Yields Dipped, Dollar Wiped Out Gains

Gold futures are edging higher late in the session on Tuesday after reversing earlier losses. The market is rebounding after Treasury yields dipped and the U.S. Dollar erased all of its earlier gains. Volume is a little on the light side as some of the major players straddle the sidelines ahead of Friday’s important U.S. consumer price index (CPI) report.

At 18:32 GMT, August Comex gold is trading $1855.30, up $11.60 or +0.63%. The SPDR Gold Shares ETF (GLD) is at $172.78, up $0.96 or +0.56%.

Friday’s U.S. consumer inflation report (CPI) is expected to offer further clues on the pace of U.S. rate increases.

The CPI is expected to have gained 0.7% in May, compared with 0.3% in April, with annual inflation unchanged at 8.3%, according to the median estimate of economists polled by Reuters.

While some believe higher inflation would be bullish for gold prices, a jump in inflation in this report could actually be bearish for gold because it could boost expectations that the Fed will continue to aggressively hike rates as it tries to bring down price pressures that are rising at the fastest pace in 40 years.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1878.60 will signal a resumption of the uptrend. A move through $1830.20 will change the main trend to down.

The market has been straddling a support cluster at $1835.30 to $1854.80 with the best support, a longer-term Fibonacci level at $1844.00.

On the upside, the resistance is a pair of 50% levels at $1890.00 to $1900.30.

Daily Swing Chart Technical Forecast

Trader reaction to $1854.80 is likely to determine the direction of the August Comex gold market into the close on Tuesday.

Bullish Scenario

A sustained move over $1854.80 will indicate the presence of buyers. If this creates enough upside momentum then look for a move into the pivot at $1858.60. Overtaking this level will be a sign of strength with $1878.60 the next target.

Bearish Scenario

A sustained move under $1854.80 will signal the presence of sellers. This could lead to a labored break with potential downside targets the major Fibonacci level at $1844.00, followed by a short-term 50% level at $1835.30 and a main bottom at $1830.20.

Taking out $1830.20 will change the main trend to down. This could trigger an acceleration to the downside with $1792.00 the next major target.