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James Hyerczyk
Comex Gold

Gold futures are trading lower on Thursday, but inside yesterday’s range. This chart pattern tends to indicate investor indecision and impending volatility. Gold traders are paying close attention to the movement in the March U.S. Dollar Index futures contract as it approaches the December 14 main top at 97.195. Trader reaction to this level is likely to determine the next major move in gold prices.

At 06:48 GMT, April Comex gold is trading $1311.00, down $4.10 or -0.31%.

The dollar is the most important catalyst behind the movement in gold at this time. This was clearly demonstrated with Wednesday’s volatile outside move. Gold rallied early in the session when the dollar drifted lower against a basket of currencies then broke sharply following the release of stronger-than-expected U.S. consumer inflation data, which triggered a reversal to the upside in the U.S. Dollar.

Daily April Comex Gold

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1331.10 will signal a resumption of the uptrend, while a move through $1306.40 will change the main trend to down. The sideways price action also suggests that something has to give sooner or later, which could lead to a volatile breakout.

Strong buyers are defending gold prices on dips because they are banking on lower interest rates to make gold a more desirable asset. Strong sellers are reacting to the powerful U.S. Dollar. One of these sides will have to throw in the towel on their beliefs in order to trigger a breakout move.

Gold is currently trading inside a major retracement zone bounded by $1293.60 and $1319.70. Trader reaction to this zone will determine the longer-term direction of the market.

On the downside, the main retracement zone target comes in at $1306.30 to $1300.40.

On the upside, the target is a 50% level at $1318.80. This level forms a resistance cluster with the major Fibonacci level at $1319.70.

Finally, the short-term range is $1306.40 to $1321.70. Its 50% level or pivot is $1314.10.


Daily Technical Forecast

Based on the early price action, the direction of the April Comex gold market today is likely to be determined by trader reaction to a pair of Gann angles at $1311.10 and $1311.50.

Bullish Scenario

A sustained move over $1311.50 will indicate the presence of buyers. The first upside target is the short-term pivot at $1314.10.

Taking out $1314.10 could trigger an acceleration to the upside with the next target the resistance cluster at $1318.80 to $1319.70. This is followed closely by a downtrending Gann angle at $1321.10 and yesterday’s high at $1321.70.

Bearish Scenario

A sustained move under $1311.10 will signal the presence of sellers. The daily chart is wide open under this angle with potential targets coming in at $1307.10, $1306.40 and $1306.30.

The 50% level at $1306.30 is a potential trigger point for an acceleration to the downside with the next target the Fibonacci level at $1300.40.

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