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James Hyerczyk
Gold

Gold futures are trading slightly higher late in the session on Friday during a volatile trading session that saw the market soar to its highest level since January 8, only to pullback to nearly unchanged later in the session.

Traders said the early rally was fueled by weakness in the equity markets as an ongoing retail versus hedge fund battle and doubts over European vaccine supply hurt global stocks. Meanwhile, new trial results from Johnson & Johnson’s coronavirus vaccine disappointed some investors, weighing on the broader market.

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At 20:50 GMT, April Comex gold futures are trading $1846.90, up $5.70 or +0.31%.

While gold traders were reading the headlines, the U.S. Dollar held steady, taking some of bullion’s allure kept it on track for its worst January in a decade.

The price action suggests the intraday spike to the upside may have been fueled by a volume vacuum, which will have little impact on the longer-term direction of the market.

Daily April Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up when buyers inched through the recent swing top at $1878.10. The old top was taken out by $0.80 before the rally failed. This indicates there is still a major seller in the market. A trade through $1832.40 will change the main trend to down.

The main range is $1771.30 to $1966.80. On Friday, April gold futures straddled its retracement zone at $1869.10 to $1846.00. Trader reaction to this zone is likely to determine the near-term direction of the market.

The short-term range is $1966.80 to $1821.30. Its retracement zone at $1894.10 to $1911.20 is the next potential upside target. Sellers may show up on a test of this zone. They will be trying to form a potentially bearish closing price reversal top. Buyers are going to try to trigger a breakout over $1911.20 with their eyes set on $1966.80.

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Short-Term Outlook

Friday’s price action indicates the near-term direction of the April gold futures contract will be determined by trader reaction to $1869.10 to $1846.00. Holding between these levels will create a neutral tone.

Bullish Scenario

A sustained move over $1869.10 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible surge into $1894.10 to $1911.20.

Bearish Scenario

A sustained move under $1846.00 will signal the presence of sellers. This could trigger a break into a pair of main bottoms at $1832.40 and $1821.30. If the last bottom fails as support then look for the selling to possibly extend into the major 50% level at $1787.30.

For a look at all of today’s economic events, check out our economic calendar.

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