Gold Price Futures (GC) Technical Analysis Forecast – Weakens Under $1780.50, Strengthens Over $1788.10

Gold futures are edging lower on Monday as demand for higher yielding assets fueled by optimism over a coronavirus vaccine-led economic rebound offset a weaker U.S. Dollar. The dollar-denominated asset is now in a position to post its worst monthly performance in four years.

Short-term sellers are being influenced by the lack of fresh fiscal stimulus, while longer-term investors seem to be liquidating rather large positions in anticipation of a strong recovery early next year, led by the COVID-19 vaccine. The lifting of political uncertainty last week and expectations of greater stability under president-elect Joe Biden’s incoming administration ignited the current steep plunge last week.

At 03:56 GMT, February Comex gold futures are trading $1773.40, down $14.70 or -0.82%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend was reaffirmed earlier today when sellers took out Friday’s low. The next swing bottom target is $1699.50. A trade through $1973.70 will change the main trend to up.

The minor trend is also down. A move through $1884.70 will change the minor trend to up. This will shift momentum to the upside.

The market is down 15 sessions from the last main top which puts it in a position to post a potentially bullish closing price reversal bottom. The chart pattern won’t change the main trend to up, but it could lead to a 2 to 3 day counter-trend rally.

The main range is $1461.70 to $2099.20. Its retracement zone at $1780.50 to $1705.20 is currently being tested. This area is major long-term support so traders should pay close attention to the price action and order flow inside this zone. Buyers could show up because the zone represents value.

Daily Swing Chart Technical Forecast

We’re watching two levels on Monday for guidance, the main 50% level at $1780.50 and last Friday’s close at $1788.10.

Bearish Scenario

A sustained move under $1780.50 will indicate the presence of sellers. If this move can create enough downside momentum then look for a potential break into the main Fibonacci level at $1705.20, followed by a main bottom at $1699.50.

Bullish Scenario

A sustained move over $1780.50 will be the first sign that the selling is getting weaker or the counter-trend buying stronger. Overcoming $1788.10, however, will put the gold market in a position to post a potentially bullish closing price reversal bottom.

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