Gold Price Futures (GC) Technical Analysis – July 12, 2017 Forecast

August Comex Gold futures are trading slightly higher shortly ahead of the regular session opening. The market is being supported by a weaker dollar, political concerns in the U.S. and general nervousness ahead of the first day of testimony before Congress by Fed Chair Janet Yellen.

Yellen is scheduled to deliver her semi-annual report on monetary policy at 1400 GMT. I don’t expect any surprises. She is likely to acknowledge the strong labor market while saying the economy is moving forward, but at a slow pace. Yellen is also likely to say that the muted inflation numbers should start to move towards the Fed’s 2.0 percent target once employers start to raise wages.

Look for Yellen to say that the central bank is likely to raise interest rates at least one more time in 2017. She’ll also talk about the Fed’s plan to trim its massive balance sheet.

At this time, investors think the Fed will raise rates in December and begin the process of trimming the balance sheet at that time. Gold is likely to break if she says that these events could occur as early as September.

Technical Analysis

The main trend is down according to the daily swing chart. However, a new main bottom has formed at $1204.00. A trade through this bottom will reaffirm the downtrend.

The major retracement zone support is $1216.80 to $1197.10. This area provided support earlier in the week.

The short-term range is $1260.00 to $1204.00. Its retracement zone at $1232.00 to $1238.60 is the primary upside target. Since the main trend is down, we could see sellers show up on a test of this zone.

Forecast

Based on the current price at $1217.90 and the earlier price action, the direction of the gold market today is likely to be determined by trader reaction to the major 50% level at $1226.80.

A sustained move over $1226.80 will indicate the buying is getting stronger. This could trigger an acceleration into $1232.00, followed by $1236.00.

A break back under $1216.80 will signal the presence of sellers. This could trigger a labored break because of a number of potential support levels at $1212.00, $1204.30, $1204.00, $1201.40 and $1197.10.

Breaking $1197.10 could trigger a huge break since the next major target doesn’t come in until $1168.00.

Watch the price action and read the order flow at $1216.80 all session. Trader reaction to this level will tell us if the buying is getting stronger or if sellers are retaking control.