Gold Price Futures (GC) Technical Analysis – Jumping to New Contract High on Stimulus ExpectationsThe direction of the August Comex gold futures contract the rest of the session on Tuesday is likely to be determined by trader reaction to $1817.40.
Gold futures are trading higher shortly after the regular session opening. The market also hit a new contract high. Meanwhile, the spot market reached a nine-year peak. The rally was fueled by a lower U.S. Dollar which drove up foreign demand for dollar-denominated gold and expectations of more stimulus to bailout struggling pandemic-hit economies.
At 12:30 GMT, August Comex gold is trading $1841.20, up $23.80 or +1.31%.
Earlier in the session, European Union (EU) policymakers agreed to fund a 750 billion Euro ($857 billion) stimulus plan, triggering a surge to the upside. In the U.S. this week, Congress is expected to debate the size of the next economic relief bill.
Gold tends to benefit from widespread stimulus measures because it is widely viewed as a hedge against inflation and currency debasement.
As far as rising coronavirus cases are concerned, the subject is irrelevant as long as progress is being made toward a vaccine. Think stimulus and vaccine moving forward.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous main top at $1829.80. Taking out $1791.10 will change the main trend to down.
Daily Swing Chart Technical Forecast
Our work suggests that the direction of the August Comex gold futures contract the rest of the session on Tuesday is likely to be determined by trader reaction to yesterday’s close at $1817.40.
A sustained move over $1817.40 will indicate the presence of buyers. This should help maintain the bullish tone.
A sustained move under $1817.40 will signal the presence of sellers. This could trigger a further break into the minor pivot at $1810.60. This is a potential trigger point for an acceleration to the downside.
A close under $1817.40 will form a potentially bearish closing price reversal top. If confirmed, this could lead to a 2 to 3 day correction.
For a look at all of today’s economic events, check out our economic calendar.