Gold Price Futures (GC) Technical Analysis – Main Trend Changes to Up on Trade Through $1879.80

Gold futures jumped more than 1% on Tuesday, bolstered by expectations of more coronavirus relief aid from U.S. lawmakers as surging COVID-19 cases renewed concerns over the pandemic’s economic toll.

The rising COVID-19 U.S. death toll is putting pressure on the U.S. Congress to roll out the next wave of fiscal aid, buoying optimism around a proposed $1.4 trillion bill.

Surging COVID-19 infections have also led to tighter restrictions being imposed in the Netherlands, Germany and London. This suggests that countries will have to step up both fiscal and monetary stimulus to help keep their economies afloat while waiting for the vaccines to work.

On Tuesday, February Comex gold settled at $1857.50, up $25.40 or +1.39%.

A weak dollar further enhanced the appeal for the dollar-denominated asset.

Traders will get the opportunity on Wednesday to react to the latest announcements from the U.S. Federal Reserve after their two-day meeting concludes. Central bank policymakers are expected to maintain their overnight benchmark interest rate at near zero.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1879.80 will change the main trend to up. A move through $1820 will signal a resumption of the downtrend, while a move through $1767.20 will reaffirm the downtrend.

A trade through $1859.30 will make $1820.00 a new main bottom. This will indicate that a potentially bullish secondary higher bottom is forming.

The minor range is $1767.20 to $1879.80. Its retracement one at $1823.50 to $1810.20 is support. This zone stopped the selling at $1820.00 on Monday.

The short-term range is $1973.30 to $1767.20. Its retracement zone at $1870.30 to $1894.60 is resistance. This zone stopped the market at $1879.80 on December 8.

The major support is a long-term retracement zone at $1780.50 to $1705.20. This zone stopped the selling at $1767.20 on November 30.

Daily Swing Chart Technical Forecast

The market is currently trading between a pair of retracement zones at $1823.50 to $1810.20 and $1870.30 to $1894.60.

Bullish news about stimulus will bring in the buyers. If the news is bullish enough then look for an attempted breakout over $1894.60. This is the trigger point for a potential acceleration to the upside. The size of the stimulus package is likely to determine whether buyers take out this level.

A failure to agree on a stimulus package before next week’s deadline will be bad news for the bulls. This could trigger a retest of $1823.50 to $1810.20. If the lower level fails as support then look for the selling to possibly extend into $1780.50 to $1767.20.