Gold Price Futures (GC) Technical Analysis – Looking for Pullback into $1854.50 to $1844.00 Support Zone

Gold futures are trading lower early Monday after an attempt to follow-through to the upside following Friday’s dramatic bullish reversal failed to draw enough buyers to extend the move.

Fundamentally speaking, buyers may have been spooked by a new high for the year in U.S. Treasury yields and a gap higher opening in the U.S. Dollar Index.

At 02:53 GMT, August Comex gold futures are trading $1866.70, down $8.80 or -0.47%.

Bullion is often seen as an inflation hedge, but the opportunity cost of holding it is higher when the Fed raises short-term interest rates, since gold is a non-yielding investment. Furthermore, a stronger U.S. Dollar tends to dampen foreign demand for gold.

Fear of aggressive rate hikes by the Fed could also be weighing on gold prices. The Fed is expected to deliver its second straight half-point rate hike to bring inflation under control, and could be equally aggressive in July and September.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Friday when buyers took out the previous main top at $1878.60. A trade through the intraday high at $1882.50 will signal a resumption of the uptrend. A move through $1826.50 will change the main trend to down.

On the upside, the nearest resistance is a pair of 50% levels at $1890.00 and $1900.70. On the downside, the support is a price cluster at $1854.80 to $1837.30. Inside this range is the long-term Fibonacci level support at $1844.00.

Daily Swing Chart Technical Forecast

Trader reaction to $1875.50 is likely to determine the direction of the August Comex gold futures contract on Monday.

Bearish Scenario

A sustained move under $1875.50 will indicate the presence of sellers. If this move creates enough downside momentum, we could see a correction into $1854.80, followed by $1844.00 and $1837.30. Since the main trend is up, buyers could step in on a test of any of these levels with $1844.00 the most important support price.

Bullish Scenario

A sustained move over $1875.50 will signal the presence of buyers. The first target is the intraday high at $1882.50. Overtaking this level could trigger a further rally into the long-term 50% level at $1890.00.

Sellers could come in on the first test of $1890.00. Overcoming this level, however, will likely lead to a test of $1900.70. This is a potential trigger point for an acceleration to the upside.

There is a main top at $1917.60, but the most likely target on the radar is the retracement zone at $1938.60 to $1973.20.