February Comex Gold futures are trading nearly flat shortly before the regular session opening and the release of key U.S. producer inflation data. The results of the report could trigger a volatile reaction in gold. If the PPI comes in higher than expected then this could spark a rally in the U.S. Dollar which would then encourage investors to sell dollar denominated gold.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1328.60 will signal a resumption of the uptrend. If this move gains enough traction, we could see an eventual test of the September 8 main top at $1365.80.
The market isn’t close to changing the main trend to down, but it is in the window of time for a potentially bearish closing price reversal top.
The main range is $1365.80 to $1238.30. Its retracement zone is $1302.10 to $1317.10. Trader reaction to this zone will determine the near-term tone of the market. The important level to watch is the Fibonacci level at $1317.10. This level has been straddled for eight trading sessions.
An even longer-term retracement zone comes in at $1290.20 to $1272.30. This zone is a target and support zone.
The short-term range is $1238.30 to $1328.60. If there is a correction then its 50% level at $1283.50 will be the primary downside target. Since the main trend is up, buyers are likely to come in on a test of this level.
Daily Technical Forecast
Based on the current price at $1318.70 and the earlier price action, the direction of the gold market today is likely to be determined by trader reaction to the Fibonacci level at $1317.10.
Holding above $1317.10 will indicate the presence of buyers. Overtaking the steep uptrending angle at $1318.30 will indicate the buying is getting stronger. Crossing over to the strong side of the downtrending angle at $1322.80 and sustaining the move could trigger a move into $1328.60. This price could be the trigger point for a possible acceleration into the next downtrending Gann angle at $1344.30. This is the last potential resistance angle before the $1365.80 main top.
A sustained move under $1317.10 will signal the presence of sellers. The daily chart indicates there is plenty of room to the downside with $1302.10 the next likely target. This is followed by $1290.20 and $1283.50.