The direction of the April Comex gold market into the close is likely to be determined by trader reaction to the pivot at $1807.80.
Gold futures jumped nearly 2% to a near one-week high on Monday, as expectations for rising inflation triggered equity valuation concerns, fueling a short-covering rally in the precious metal. Meanwhile, another dip in the U.S. Dollar against a basket of major currencies lent further support.
Rising real yields and inflation concerns made equity valuations look more stretched in comparison and pushed investors toward non-interest bearing assets like gold, which is widely viewed as a hedge against inflation.
At 20:45 GMT, April Comex gold is trading $1808.60, up $31.20 or +1.76%.
The main trend is down according to the daily swing chart. A trade through $1856.60 will change the main trend to up. A move through $1759.00 will signal a resumption of the downtrend.
The major support is a long-term retracement zone at $1787.30 to $1711.70. This zone stopped the selling at $1759.00 on Friday.
The minor range is $1856.60 to $1759.00. At the close, gold is straddling its 50% level at $1807.80.
The short-term range is $1878.90 to $1759.00. Its retracement zone at $1819.00 to $1833.10 is the next likely upside target.
The main range is $1966.80 to $1759.00. If the trend changes to up then look for the rally to possibly extend into its retracement zone at $1862.90 to $1887.40.
The direction of the April Comex gold market into the close is likely to be determined by trader reaction to the pivot at $1807.80.
A sustained move over $1807.80 will indicate the presence of buyers. This could trigger a move into $1819.00 to $1833.10. Since the main trend is down, look for sellers on the first test of this area.
Overcoming $1833.10 could trigger a surge into $1856.60 to $1862.90.
A sustained move under $1807.80 will signal the presence of sellers. This could trigger a steep break into the major 50% level at $1787.30. If this fails then look for a possible retest of the main bottom at $1759.00.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.