Gold Price Futures (GC) Technical Analysis – Hovering Below $1798.50 – $1822.60 Retracement Zone Resistance

Gold futures are up slightly on Tuesday after hitting their highest level since July 5 earlier in the session. The market was driven higher by a drop in Treasury yields and a weaker U.S. Dollar. However, prices retreated after nearing a key resistance area, amid a turnaround in the greenback.

Prices rose in reaction to weak manufacturing data in Asia, Europe and the United States on Monday that pushed up the odds of a massive global recession and suggested the major central banks may have to be more flexible with their plans to aggressively raise interest rates.

At 09:32 GMT, December Comex gold futures are trading $1749.70, up 2.00 or +0.11%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $165.03, up $0.93 or +0.57%.

The gold market weakened, however, just below a technical resistance area and as safe-haven buying drove up the U.S. Dollar.

Global investors began to buy the U.S. Dollar on worries over a possible escalation in Sino-U.S. tension, with U.S. House of Representatives Speaker Nancy Pelosi set to begin a visit to Taiwan amid objections from China.

Safe-Haven Buying Supporting Dollar

Gold could be under pressure later in the session if the situation in Taiwan escalates. Safe-haven buyers would likely buy Treasury bonds and the U.S. Dollar for protection. If tensions ease and the dollar pulls back then look for gold to edge higher.

In economic news, the JOLTS Job Openings report comes out at 14:00 GMT. Traders are looking for a reading of 10.99 million. It has been coming down since May 3. Last month, it came in at 11.25 million. A lower than expected reading can be perceived as bearish for the U.S. Dollar and bullish for gold.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at $1797.30 will signal a resumption of the uptrend. A move through $1727.00 will change the main trend to down.

The intermediate range is $1900.80 to $1696.10. Its retracement zone at $1798.50 to $1822.60 is potential resistance. It’s also controlling the near-term direction of the gold market.

The nearest minor support is $1762.20, followed by another minor support level at $1746.70.

The support is a long-term 50% level at $1709.10.

Daily Swing Chart Technical Forecast

Trader reaction to $1787.70 is likely to determine the direction of the December Comex gold futures contract on Tuesday.

Bullish Scenario

A sustained move over $1787.70 will indicate the presence of buyers. The first upside target is the 50% level at $1798.50. Taking out this level could trigger a surge into the Fibonacci level at $1822.60. This price is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $1787.70 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the first pivot at $1762.20. Buyers could come in on the first test of this level. If it fails then look for a further break into the next pivot at $1746.70. A test of this price could also attract buyers.

Side Notes

A close under $1787.70 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.