Gold Price Futures (GC) Technical Analysis – In Position to Challenge Major Weekly Resistance Zone at $1285.70 to $1312.30

Bullish investors had a great week as gold futures continued to climb because of the shift in investor sentiment toward the U.S. Dollar. Driving the dollar lower is the softer tone from the U.S. Federal Reserve. Since the release of the Fed’s December monetary policy statement, gold traders have been pricing in the strong possibility the Fed may take a pause in its aggressive mission to raise rates in 2019.

Last week, February Comex gold futures settled at $1283.00, up $24.90 or +1.98%.’

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. The uptrend resumed last week when buyers took out the previous week’s high at $1270.30.

The daily chart indicates there is plenty of room to the upside with the next main top on the weekly chart coming in at $1393.70. The main trend will change to down on the weekly chart on a move through $1202.40.

The main range is $1398.20 to $1173.20. Its retracement zone at $1285.70 to $1312.30 is the primary upside target. Last week’s high at $1284.70 fell just short of the lower or 50% level at $1285.70.

Weekly Swing Chart Technical Forecast

Based on last week’s price action and the close at $1283.00, the direction of the February Comex gold futures contract this week is likely to be determined by trader reaction to the 50% level at $1285.70.

Bullish Scenario

Taking out and sustaining a rally over $1285.70 will indicate the presence of buyers. If this move generates enough upside momentum then look for an eventual test of the Fibonacci level at $1312.30. This move is likely to be underpinned by lower Treasury yields and a weaker U.S. Dollar.

Bearish Scenario

The inability to overcome or sustain a rally over $1285.70 will signal the return of sellers. Additionally, this week is the seventh week from the last main bottom which puts gold inside the window of time for a potentially bearish closing price reversal top.

If a reversal top is formed and confirmed next week, we could see the start of a 2 to 3 week correction with the next target about $1243.50.