Gold Price Futures (GC) Technical Analysis – Investors Done Chasing Market Higher, Looking for Value Now

Gold plunged on Thursday as investors liquidated long positions on concerns over weak physical demand. The news that the virus seems to be receding a little bit as more countries opened up and loosened restrictions also weighed on short-term demand.

Nonetheless, the market is set to finish its best month since August on the massive amounts of stimulus intended to stem the economic damage caused by the COVID-19 outbreak. For the month, bullion has risen more than 7% having hit $1788.80 an ounce on April 14, a more than seven-year high.

At 20:26 GMT, June Comex gold is trading $1693.30, down $20.10 or -1.11%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out the last swing bottom at $1704.10. The next downside target is the swing bottom at $1666.20. The trend will change back to up if buyers take out the swing top at $1737.00.

The minor range is $1788.80 to $1666.20. Its 50% level or pivot at $1727.50 is resistance.

The short-term range is $1576.00 to $1788.80. Its retracement zone at $1682.40 to $1657.30 is the next potential downside target. Buyers could show up on the first test of this zone since it did stop the selling at $1666.20 on April 21.

The intermediate range is $1453.00 to $1788.80. If $1657.30 fails as support then look for the selling to possibly extend into the next retracement zone at $1620.90 to $1581.30.

Short-Term Outlook

Given the weak close, we’re going to be watching trader reaction to the 50% level at $1682.40 early Friday. If we get a counter-trend bounce then look for the market to become rangebound with $1727.50 the top of the range and $1682.40 the bottom of the range.

If $1682.40 fails as support then look for the selling to possibly extend into the main bottom at $1666.20 then the Fibonacci level at $1657.30. The latter is a potential trigger point for an acceleration into the 50% level at $1620.90.

Side Notes

The distance between the retracement zones is wide so look for wide swings and heightened volatility.