Based on the early trade, pressure will remain on gold prices as long as the market remains under the Fibonacci level at $1300.60. This is resistance and a trigger point for a potential acceleration to the upside.
August Comex Gold futures are trading lower on Tuesday shortly after the regular session opening. The market is being pressured by a recovery in the U.S. Dollar and increasing demand for higher risk assets. A drop in U.S. Treasury yields may actually be underpinning gold prices.
The main trend is down according to the daily swing chart. A trade through $1286.80 will signal a resumption of the downtrend.
The minor trend is also down. A trade through $1311.50 will change the minor trend to up, following closing by $1312.60. A move through $1293.10 will indicate the selling is getting stronger, targeting $1292.00 and $1286.80 next.
The market is also trading on the weak side of a major Fibonacci level at $1300.60.
The main range is $1332.40 to $1286.80. Its retracement zone at $1309.60 to $1315.00 is the next upside target, followed by a major 50% level at $1315.60.
Based on the early trade, pressure will remain on gold prices as long as the market remains under the Fibonacci level at $1300.60. This is resistance.
A move through $1293.10 should lead to increased selling pressure and this type of trading should continue down to $1292 then $1286.80.
Overcoming and sustaining a move over $1300.60 will signal the return of buyers. This will put the market in a position to accelerate into at least $1309.60 if the buying volume increases.
The short-term direction is being controlled by the Fibonacci level at $1300.60. The longer-term direction is being controlled by the 50% level at $1315.60. Holding between these levels will create a neutral market.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.