Gold Price Futures (GC) Technical Analysis – Major Decision for Traders on Pullback into $1711.90 – $1704.70

Gold futures are edging lower on Monday under low volume conditions due to the extended Easter holiday in Asia and Europe. The catalyst behind the weakness is Friday’s blowout U.S. Non-Farm Payrolls report that fueled hopes for a rapid economic recovery, raising the prospects for higher interest rates, which tend to weigh on demand for non-yielding gold.

At 10:57 GMT, June Comex gold is trading $1725.60, down $2.80 or -0.16%.

Later today at 14:00 GMT, investors will get the opportunity to react to the latest data on the U.S. services industry. The ISM Services PMI is expected to come in at 58.3, up from 55.3. Factory Orders are expected to dip 0.5% from last month’s 2.6% reading.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1756.00 will change the main trend to up.  A move through $1677.30 will reaffirm the downtrend.

The market is trading inside a major retracement zone at $1711.90 to $1788.50. This zone is controlling the longer-term direction of the market.

The minor range is 1677.30 to $1732.00. Its 50% level at $1704.70 is potential support.

Short-term 50% levels at $1746.90 and $1767.60 are potential upside targets and resistance.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold futures contract is likely to be determined by trader reaction to Friday’s high at $1732.00.

Bearish Scenario

A sustained move under $1732.00 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the major Fibonacci level at $1711.90 and the minor 50% level at $1704.70.

Aggressive counter-trend buyers could come in on the first test of $1711.90 to $1704.70. These buyers will be trying to form a potentially bullish secondary higher bottom.

If $1704.70 fails as support then look for a possible acceleration to the downside with potential targets a pair of main bottoms at $1677.30 and $1676.20.

Bullish Scenario

A sustained move over $1732.00 will indicate the buying is getting stronger. This could trigger a quick rally into $1746.90, followed by $1756.00. Taking out this main top will change the trend to up with $1767.60 the next target. This is a potential trigger point for an acceleration into $1788.50.