Gold Price Futures (GC) Technical Analysis – In Position to Challenge Main Top at $1532.40

Gold futures continue to push higher into the close on Wednesday with the rally being driven primarily by a plunge in global bond yields. That move was fueled by a surprise 50-basis point rate cut by the Reserve Bank of New Zealand earlier in the day.

Remember that gold doesn’t pay any interest to hold it, therefore, it’s a more value asset than bonds that pay negative interest. According to CNBC, there is $15 trillion worth of bonds with negative rates. At this time, investors would rather get paid nothing to hold gold than pay to lend money to a government. Makes sense to me.

At 18:56 GMT, December Comex gold is trading $1516.40, up $32.40 or +2.18%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The next target is the March 14, 2014 main top at $1532.40. The main trend will change to down on a trade through $1412.10. This is highly unlikely, but due to the steep rally, it is vulnerable to a closing price reversal time. Profit-taking will likely be behind that formation.

Based on the current price at $1516.40, the nearest support is a pair of uptrending Gann angles at $1502.50 and $1500.40. Crossing to the strong side of these angles, moving up at a rate of $4.00 per day, helped trigger an acceleration to the upside earlier in the session.

If $1500.40 fails as support then look for a pullback into the next support, a steep uptrending Gann angle moving up at a rate of $16.00 per day. This angle is at $1476.10.