Gold Price Futures (GC) Technical Analysis – February 4, 2019 Forecast

Gold futures are trading sharply lower on Monday. The selling is being driven by rising U.S. Treasury yields. Higher yields are underpinning the U.S. Dollar, which is helping to drive down foreign demand for dollar-denominated gold.

The catalyst behind the price action is Friday’s robust U.S. Non-Farm Payrolls report and the stronger-than-expected ISM Manufacturing PMI report. The results of both reports were strong enough to drive investors to decrease the odds of a rate cut later in the year by the U.S. Federal Reserve. This is what’s driving yields higher.

At 06:29 GMT, April Comex gold is trading $1316.80, down $5.30 or -0.40%.

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. The main trend will change to down if sellers can take out the main bottom at $1281.50.

The major long-term retracement zone is $1293.60 to $1319.70. After closing above this zone last week, sellers have now driven gold prices back inside this zone.

The main range is $1281.50 to $1331.10. If the selling pressure continues then look for an eventual break into its retracement zone at $1306.30 to $1300.40. This zone falls inside the major retracement zone.

Daily Technical Forecast

Based on the early price action, the direction of the April Comex gold futures contract is likely to be determined by trader reaction to the major Fibonacci level at $1319.70.

Bullish Scenario

Overtaking and sustaining a rally over $1319.70 will indicate the presence of buyers. This could trigger a rally into a steep downtrending Gann angle at $1323.10. This angle provided resistance earlier in the session.

Overcoming $1323.10 could trigger a further ally into a pair of downtrending Gann angles at $1327.10 and $1329.10. The latter is the last potential resistance angle before the $1331.10 main top.

Bearish Scenario

A sustained move under $1319.70 will signal the presence of sellers. The daily chart indicates there is plenty of room to the downside so this could trigger a sharp break. The next downside target is the uptrending Gann angle at $1309.50. Since the main trend is up, look for buyers to show up on a test of this angle.

If $1309.50 fails as support then look for the selling to extend into the main retracement zone at $1306.30 to $1300.40.