Gold Price Futures (GC) Technical Analysis – Higher as Dovish Powell Sets Up Potential Breakout Over $1816.10
Gold futures are trading higher late in the session on Wednesday following the release of the Federal Reserve’s monetary policy statement that was “not too hawkish and not too dovish.”
Initially, gold prices fell on the news as Treasury yields and the U.S. Dollar firmed after Fed policymakers said the economy was making progress toward its goals.
However, yields were capped along with the greenback when Fed Chairman Jerome Powell in his post-statement new conference cautioned there was a ways to go before the central bank would adjust its easy policies. This statement triggered a turnaround in gold, putting the market in a position to breakout over resistance.
At 19:38 GMT, December Comex gold is trading $1809.50, up $5.50 or +0.30%.
We’ve said numerous times that you should avoid trading the initial headline from the Fed when Powell is scheduled for a news conference. If you traded off the first headline, you probably went home thinking gold was trading weaker. To be a good analyst/trader, one has to know the characteristics of each report to analyze/trade successfully.
In this case, Powell’s dovish comments were enough to shake out the weaker shorts. This led to the intraday short-covering rally that may have shifted momentum enough to fuel a near-term breakout to the upside.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1814.50 will change the main trend to up, while a move through $1793.10 will signal a resumption of the downtrend.
The minor range is $1793.10 to $1814.50. Gold is currently trading on the strong side of its 50% level at $1803.80.
On the downside, support is the long-term 50% level at $1795.00 and the short-term Fibonacci level at $1786.80.
The short-term range is $1839.00 to $1793.10. Its 50% level at $1816.10 is the next upside target and potential trigger point for an acceleration to the upside.
Daily Swing Chart Technical Forecast
The direction of the December Comex gold futures contract into the close on Wednesday is likely to be determined by trader reaction to $1803.80.
A sustained move over $1803.80 will indicate the presence of buyers. This could trigger a late session rally into $1814.50 to $1816.10.
Taking out $1816.10 on strong buying volume could trigger an acceleration to the upside with $1829.50 the first target, followed by the resistance cluster at $1839.00 to $1839.90.
A sustained move under $1803.80 will signal the presence of sellers. This could lead to a retest of the support cluster at $1795.60, $1795.00, $1793.10 and $1786.80. The latter is a potential trigger point for an acceleration to the downside.