Gold Price Futures (GC) Technical Analysis Forecast – Holding $1780.50 Could Drive Market into $1826.00

Gold futures are trading higher on Tuesday, rebounding from a five-month low hit the previous session.  The rally is being fueled by a combination of short-covering and a weaker U.S. Dollar. Some traders are saying doubts over whether the vaccine will be effective fast enough to overcome the current surge in coronavirus cases is also encouraging traders to lighten up on the short side.

At 11:09 GMT, February Comex gold futures are trading $1807.70, up $26.80 or 1.50%.

The market is also likely being supported by expectations of further monetary stimulus from the Federal Reserve. In remarks released on Monday, Fed Chairman Jerome Powell said the U.S. is entering “challenging” few months, while a potential vaccine faces challenges of production and mass distribution before its economic impact become clear.

The focus now shifts to Powell’s testimony before the Senate Banking Committee later in the day where he could emphasize the need for additional fiscal and monetary policy stimulus. Both are potentially bullish for gold prices.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1767.20 will signal a resumption of the downtrend. The main trend changes to down on a move through $1973.70.

The minor trend is also down. A trade through $1884.70 will change the minor trend to up. This will also shift momentum to the upside. A new minor bottom was formed at $1767.20 overnight.

The major support is the long-term retracement zone at $1780.50 to $1705.20. This area held on Monday when the market reached its low at $1767.20.

The first minor range is $1884.70 to $1767.20. Its 50% level at $1826.00 is the first upside target. Watch for sellers on the initial test of this level.

The second minor range is $1973.70 to $1767.20. Its retracement zone at $1870.50 to $1894.80 is the next potential upside target.

Daily Swing Chart Technical Forecast

The early price action indicates the direction of the February Comex gold market will be determined by trader reaction to $1780.50.

Bullish Scenario

A sustained move over $1780.50 will indicate the presence of buyers. This could create the upside momentum needed to challenge $1826.00. Overcoming this level could trigger an acceleration to the upside with $1870.50 the next potential upside target.

Bearish Scenario

A sustained move under $1780.50 will signal the presence of sellers. This could lead to a retest of yesterday’s low at $1767.20. If this fails then look for the selling to possibly extend into $1705.20 over the near-term.