Gold Price Futures (GC) Technical Analysis – Holding $1558.80 Could Fuel Rally into $1574.80 – $1581.20

Gold futures are edging higher on Thursday after posting a two-sided trade earlier in the session. The market is trading inside Tuesday’s range for a second day, suggesting investor indecision and impending volatility.

Investors seem to be a little confused over how to play the coronavirus news coming out of China. Some say it will turn into a bullish event if it leads to a global economic slowdown. Others are saying it’s bearish since Lunar New Year gold purchases are likely to be limited.

Adding to the confusion is the limited reaction to a plunge in Treasury yields and lower demand for risky assets, which tend to drive up demand for gold. At the same time, another jump in the U.S. Dollar could be capping gains.

At 15:35 GMT, April Comex gold futures are trading $1566.40, up $3.50 or +0.22%.

I think traders are waiting to hear from the World Health Organization. It is expected to tell us whether the virus outbreak is a local problem or a global emergency.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1619.60 will signal a resumption of the uptrend. The main trend will change to down on a move through $1542.80.

The minor trend is up. This means that momentum is also trending up.

The minor range is $1542.80 to $1574.80. Its 50% level at $1558.80 is support.

The short-term range is $1619.60 to $1542.80. Its retracement zone at $1581.20 to $1590.30 is the primary upside target.

The main range is $1458.50 to $1619.60. Its retracement zone at $1539.10 to $1520.00 is a major support zone.

Daily Technical Forecast

Based on the early price action and the current price at $1566.40, the direction of the April Comex gold futures contract the rest of the session on Thursday is likely to be determined by trader reaction to the 50% level at $1558.80. The market has been straddling this level since January 15.

Bullish Scenario

A sustained move over $1558.80 will indicate the presence of buyers. The first upside target is $1574.80, followed closely by a downtrending Gann angle at $1579.60 and a 50% level at $1581.20. Sellers could come in a test of this levels.

Taking out $1581.20 will indicate the buying is getting stronger. This could lead to a test of the Fibonacci level at $1590.30, and another downtrending Gann angle at $1599.60.

Bearish Scenario

A sustained move under $1558.80 will indicate the presence of sellers. This could lead to a test of the uptrending Gann angle at $1554.40. This angle is very important. It stopped the selling at $1542.80 on January 14.

If $1554.40 fails as support then look for the selling to possibly extend into the major 50% level at $1539.10.