Gold Price Futures (GC) Technical Analysis – Failure to Hold $1490.70 Could Lead to Near-Term Test of $1461.30

Gold futures are trading lower early Monday, pressured by a slightly better U.S. Dollar, firming Treasury yields and higher equity indexes. Optimism over U.S.-China trade relations seems to be the exerting the most influence on gold prices. Last week, the U.S. and china announced trade talks will resume on October 10-11.

At 05:32 GMT, December Comex gold futures are trading 1499.40, down $7.00 or -0.46%.

Less-dovish comments from Federal Open Market Committee (FOMC) members last week are also weighing on gold prices. They don’t see the need for the Fed to be so aggressive with policy easing, which may be an indication the central bank will pass on a rate cut at the end of October.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1490.70 will reaffirm the downtrend after a more than one week rally. The main trend will change to up on a move through $1543.30.

Under the main bottom at $1490.70, sellers face a series of retracement levels that could prevent a steep sell-off. They come in at $1489.20, $1481.30, $1471.00 and $1461.30.

The short-term range is $1566.20 to $1490.70. Its retracement zone at $1528.50 to $1537.40 is potential resistance. This zone essentially stopped the rally at $1543.30 last week.

Daily Swing Chart Technical Forecast

Given the current downside momentum and the trade at $1499.40, the direction of the December Comex gold market the rest of the session on Monday is likely to be determined by trader reaction to the main bottom at $1490.70.

Bearish Scenario

Taking out $1490.70 will signal a resumption of the downtrend. However, look for a labored break due to the 50% level at $1489.20, the minor bottom at $1488.90 and the 50% level at $1481.30.

The selling pressure could pick up speed under $1481.30, with potential targets a pair of Fibonacci levels at $1471.00 and $1461.30.

The Fib level at $1461.30 is a potential trigger point for an acceleration to the downside with the next major target coming in at $1412.10.

Bullish Scenario

A successful test of $1490.70 will indicate aggressive counter-trend buyers are coming in to defend against a steep sell-off. If they can create enough upside momentum then look for a minimum rally into $1518.30, followed by $1528.50.