Gold Price Futures (GC) Technical Analysis – Main Trend is Up, but Momentum is Trending Lower

Gold is trading slightly higher early Wednesday, underpinned by firm U.S. equity indexes, but capped by a stronger U.S. Dollar. The precious metal declined the previous session as investors scurried for cash to cover losses in other asset classes mainly driven by a plunge in crude oil prices.

The early buying has been tentative as investors kept an eye on the safe-haven U.S. Dollar, which is hovering close to a two-week high reached on Tuesday. A stronger greenback tends to weaken the dollar-denominated gold market because it reducing foreign demand.

At 04:39 GMT, June Comex gold futures are trading $1696.40, up $8.60 or +0.51%.

According to Reuters, the crash in U.S. crude prices has turned a reliable commodity less than worthless and given fresh urgency to bearish voices, who say it sounds alarm bells for global growth and are bracing for a catastrophic collapse in asset prices.

Providing some support for gold was the news of more fiscal stimulus from the U.S. Senate. On Tuesday, policymakers unanimously approved $484 billion in fresh relief for the U.S. economy and hospitals hammered by the coronavirus pandemic, sending the measure to the House of Representatives for final passage later this week.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since last Thursday. A trade through $1788.80 will signal a resumption of the uptrend. A move through $1576.00 will change the main trend to down.

The new minor range is $1788.80 to $1666.20. Its 50% level or pivot at $1727.50 is potential resistance. Watch for aggressive countertrend sellers on the first test of this level. They are going to try to form a secondary lower top.

The short-term range is $1576.00 to $1788.80. Its retracement zone at $1682.40 to $1657.30 is potential support. This zone helped stop the selling pressure on Tuesday at $1666.20.

The intermediate range is $1453.00 to $1788.80. Its retracement zone at $1620.90 to $1581.30 is the next downside target and potential support area.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold market on Wednesday will be determined by momentum.

Upside momentum will drive the market into the minor pivot at $1727.50. Overtaking this level could trigger an acceleration to the upside.

Downside momentum will lead to a test of the short-term 50% level at $1682.40. This could lead to a labored break with other potential targets at $1666.20 and $1657.30.

Taking out the short-term Fibonacci level at $1657.30 could lead to an acceleration into the intermediate retracement zone at $1620.90 to $1581.30.