Gold Price Futures (GC) Technical Analysis – Failure at $1795.00 Could Drive Market into $1757.40 – $1738.60

Gold futures plunged on Tuesday as sellers came in strong following the long U.S. holiday weekend. Friday’s feeble attempt at an upside breakout failed because of low pre-holiday volume. Meanwhile, weak buyers who bought Friday’s U.S. jobs report headline were forced to liquidate their positions.

On Tuesday, December Comex gold futures settled at $1798.50, down $35.20 or -1.92%.

Higher Treasury yields and a stronger U.S. Dollar were the primary reasons for the sell-off in gold. The benchmark 10-year yield rose to its highest level since mid-July, increasing the opportunity cost of holding non-interest bearing gold.

The rise in yields also made the U.S. Dollar a more attractive asset, denting dollar-denominated gold’s investment appeal. The dollar is now trading higher than it was before Friday’s jobs report was released so you can scratch that reason for a gold market rally off your list.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has shifted to the downside. A trade through $1836.90 will signal a resumption of the uptrend. A move through $1781.30 will change the main trend to down.

The minor trend is down. The minor trend changed to down on Tuesday when sellers took out $1806.50. This shifted momentum to the downside.

Gold is currently straddling a pair of 50% levels at $1800.00 and $1795.00. On the upside, the resistance is a Fibonacci level at $1828.80.

The new short-term range is $1677.90 to $1836.90. Its retracement zone at $1757.40 to $1738.60 is the primary downside target, followed by a long-term Fibonacci level at $1716.00.

Daily Swing Chart Technical Forecast

The direction of the December Comex gold futures contract on Wednesday is likely to be determined by trader reaction to $1800.00 and $1795.00.

Bullish Scenario

A sustained move over $1800.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for a quick rally into a new pivot at $1815.30. Taking out this level will indicate the buying is getting stronger. This could trigger a further ally into $1828.80, followed by $1836.90.

Bearish Scenario

A sustained move under $1795.00 will signal the presence of sellers. The first downside target is $1781.30. Taking out this level will change the main trend to down. A move through $1774.60 will reaffirm the downtrend.

Taking out $1774.60 will like lead to a test of the short-term retracement zone at $1757.40 to $1738.60. Look for buyers to come in on a test of this area. This is a value area and probably the last support before the start of an even bigger sell-off.