Gold Price Futures (GC) Technical Analysis – Has Room to Rally if $1302.80 Is Taken Out With ConvictionBased on the current price at $1301.90, the direction of the gold market the rest of the session is likely to be determined by trader reaction to the Fib level at $1300.60.
August Comex Gold futures are trading higher on position-squaring and short-covering shortly before the release of the U.S. Federal Reserve Monetary Policy Statement and interest rate decision. The central bank is widely expected to raise its benchmark interest rate 25 basis points, but investors will be looking for clues on the pace of future rate hikes.
Traders have to be careful about shorting the gold market. The June price hike is in, but if the Fed signals two more rate hikes this year then gold investors may read this as a bullish sign that the end of this tightening cycle is rapidly approaching.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1286.80 will signal a resumption of the downtrend. A move through $1312.60 will change the main trend to up.
The minor trend is also down. A trade through $1307.00 will change the main trend to up and signal a shift in momentum to the upside.
The major resistance is a retracement zone bounded by $1300.60 to $1315.60. Inside this zone is a short-term retracement zone at $1309.60 to $1315.00. The best resistance is a price cluster at $1315.00 to $1315.60.
The market is currently straddling the lower or Fibonacci level of the major range at $1300.60.
Daily Technical Forecast
Based on the current price at $1301.90, the direction of the gold market the rest of the session is likely to be determined by trader reaction to the Fib level at $1300.60.
A sustained move under $1300.60 will indicate the presence of sellers. This could trigger a retest of the uptrending Gann angle at $1294.80. This angle stopped the selling earlier in the session.
If the angle at $1294.80 fails as support then look for a further break into the next uptrending Gann angle at $1290.80. This is the last potential support before the $1286.80 main bottom.
A sustained move over $1300.60 will signal the presence of buyers. This could lead to a test of an uptrending Gann angle at $1302.80. Overcoming this angle will mean the buying is getting stronger. This could generate the upside momentum needed to drive the market into a pair of minor tops at $1307.00 and $1307.80, followed by a resistance cluster at $1309.60 and $1310.40.
Watch the price action and read the order flow at $1300.60 all session. Also watch for volatility with the release of the Fed reports at 1800 GMT.