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James Hyerczyk
Comex Gold

Gold futures weakened on Monday as the week-long liquidation continued. The move is being fueled by increasing appetite for risk and rising U.S. Treasury yields. The spot market even broke the psychological $1500 level, which probably triggered a series of sell stops.

According to the U.S. Commodity Futures Trading Commission (CFTC), speculators increased their bullish positions in COMEX gold and silver contracts in the week to September 3. However, on September 5, China announced the resumption of trade talks with United States, set for early October. This was a bearish development. It was also a surprise, which means those new speculative longs were likely caught in a bull trap and they will have to liquidate or face some serious pain.

The daily chart clearly indicates that sentiment has shifted from buying strength or chasing the market higher, to looking for value in a support area. If you’re bullish then this is where you should be looking for your next position. There is no urgency to get long so let the market come to you. It’s the guys that bought near the top that are panicking.

On Monday, December Comex gold settled at $1511.10, down $4.40 or 0.29%.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on September 5 when sellers took out the previous main bottom at $1525.60. The new main top is $1566.20.

The minor trend is also down. The next minor bottom target comes in at $1488.90.

The minor range is $1488.90 to $1566.20. Its 50% level or pivot at $1527.60 is new resistance.

The short term range is $1412.10 to $1566.20. Its retracement zone at $1489.20 to $1471.00 is the first support zone.

The intermediate range is $1396.40 to $1566.20. Its retracement zone at $1481.30 to $1461.30 is the second support zone.

Somewhere between $1489.20 and $1461.30 is short-term value. This is where smart buyers are likely to start coming in.


Daily Swing Chart Technical Forecast

Based on Monday’s close at $1511.10, the direction of the December Comex gold market on Tuesday is likely to be determined by trader reaction to the minor pivot at $1527.60.

Bearish Scenario

A sustained move under $1527.60 will indicate the presence of sellers. If they continue to increase their downside pressure then look for a near-term drive into the series of retracement levels at $1489.20, $1481.30, $1471.00 and $1461.30.

Bullish Scenario

A sustained move over $1527.60 will signal the return of buyers. This move could trigger a short-covering rally into at least $1530.30. Since the trend is down, sellers are likely to come in on a test of this level. They will be trying to form a potentially bearish secondary lower top.

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