Gold Price Futures (GC) Technical Analysis – Gold Spikes Higher on Low Volume, ‘Paradigm Shift’ CommentsBased on the early price action and the current price at $1423.30, the direction of the August Comex market into the close is likely to be determined by trader reaction to the pivot at $1413.80.
Gold bulls took advantage of the extremely slow volume conditions on Wednesday, driving prices nearly $25.00 higher from earlier session lows. The move puts the market in a position to continue its uptrend with potential breakout levels lined up at $1429.40, $1441.00 and $1442.90. The catalyst for the rapid turnaround were comments from a popular hedge fund manager.
At 17:40 GMT, August Comex gold futures are trading $1423.20, up $12.10 or +0.85%.
As we neared the mid-session of the trading day on Wednesday, hedge fund kingpin Ray Dalio said he is seeing a case for gold as central banks get more aggressive with policies that devalue currencies and are about to cause a “paradigm shift” in investing.
Dalio added that he is uncertain of the timing of the shift but he thinks “it is approaching and will have a big effect on what the next paradigm will look like.”
Daily Technical Analysis
The main trend is up according to the daily swing chart, but the market has been drifting sideways and straddling a pivot level for nearly a month. This chart pattern tends to indicate investor indecision and impending volatility. Volume has been extremely low as well as volatility especially since last week’s comments from Federal Reserve Chairman Jerome Powell, which seemed to solidify the chances of a 25-basis point rate cut at the end of July.
A trade through $1429.40 will signal a resumption of the uptrend on paper. This is followed by additional main tops at $1441.00 and $1442.90. Watch the price action and read the order flow as each top is approached because it is going to take rising buying volume to drive through these levels. A series of buy stops just won’t do it.
The main trend will change to down on a trade through $1387.50. This is followed closely by another main bottom at $1384.70, which could be the trigger point for a steep sell-off since the next main bottom doesn’t come in until $1323.60.
The short-term range is $1442.90 to $1384.70. Its 50% level or pivot is at $1413.80. This level has been controlling the direction of the market since July 1.
The intermediate range is $1323.60 to $1442.90. Its retracement zone at $1383.30 to $1369.20 is the next potential support zone.
The main range is $1274.60 to $1442.90. Its retracement zone at $1358.80 to $1338.90 is controlling the longer-term direction of the gold market.
Daily Technical Forecast
Based on the early price action and the current price at $1423.30, the direction of the August Comex market into the close is likely to be determined by trader reaction to the pivot at $1413.80.
A sustained move over $1413.80 will indicate the presence of buyers. The first two upside targets are an uptrending Gann angle at $1423.60 and a downtrending Gann angle at 1427.90. These are the last potential resistance angles before the $1429.40 main top.
Taking out $1429.40 could create enough upside momentum to take out an uptrending Gann angle at $1430.60, a downtrending Gann angle at $1435.40 and a pair of main tops at $1441.00 and $1442.90.
A sustained move under $1413.80 will signal the return of sellers. Crossing to the weak side of an uptrending Gann angle at $1411.50 will indicate the selling is getting stronger. This could drive the market into an uptrending Gann angle t $1399.50.
At current price levels, gold is going to need increased volume and stronger momentum to drive it in any direction. Wednesday’s rally may have been caused by a big buyer taking advantage of thin trading conditions.