Gold Price Futures (GC) Technical Analysis – Headed To $1230.70; Recovering $1251.90 Will Signal Short-Term Bottom

August Comex Gold futures are under pressure on Friday. Unless there is a closing price reversal bottom on the daily chart, we have to assume that the selling pressure will continue into next week.

The main trend is down on the weekly chart. It was reaffirmed early this week when sellers took out the December bottom at $1251.90. This week’s low so far today is $1246.90. If sellers continue to pound the market through this level then we could see a test of the July 2017 bottom at $1230.70.

Other than coming up on the anniversary date of the bottom at $1230.70, there is no guarantee that buyers will step in at this level to stop the price slide.

Crossing back over to the strong side of the former bottom at $1251.90 will indicate that sellers are lightening up on the pressure. It will also suggest that the break into $1246.90 may have caused by sell stops rather than aggressive selling.

A strong recovery over $1251.90 will trap those investors who shorted weakness under this level. This could lead to a strong short-covering rally since those investors may decide to pay up just to get out of bad positions.

On the upside is a steep downtrending Gann angle at $1287.10 this week. Since it is moving down at a rate of $4.00 per week from the $1375.10 main top, it will drop to $1279.10.

We expect the gold market to continue to trend lower as long as it remains under this Gann angle. Since the trend is down, sellers may show up on the first test of this angle. Overtaking it will indicate the short-covering is getting stronger.

August Comex Gold is down about $72.00 or 5.47% from its December 31 close. At the same time, the U.S. Dollar Index is up 4.52%. With hedge funds betting heavily on the dollar to rise because of expectations of additional rate hikes from the Fed this year, we don’t expect to see a meaningful rally in gold until the dollar breaks sharply from current price levels or unless Treasury yields plunge from current levels.