Based on the early price action and the current price at $1324.70, the direction of the June Comex gold futures contract the rest of the session is likely to be determined by trader reaction to the main 50% level at $1321.00.
Gold futures are trading higher on Monday as fears of a recession are pressuring the U.S. Dollar, while increasing gold’s appeal as a safe-haven asset. The market is also being underpinned by lower demand for riskier assets with U.S. equity markets tumbling to a 12-day lower earlier in the session.
Worries over a potential recession arose on Friday when the 10-year Treasury note yield fell below the 3-month Treasury bill yield, causing an inverted yield curve for the first time since 2007. Analysts say that this is a highly accurate predictor of a future recession.
At 13:17 GMT, June Comex gold is trading $1324.70, up $6.00 or +0.45%.
The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $1326.30 will indicate the counter-trend buying is getting stronger. The main trend will actually turn up on a trade through $1356.00. A move through $1287.50 will reaffirm the downtrend.
The main range is $1356.00 to $1287.50. Its retracement zone at $1321.80 to $1329.80 is currently being tested. This zone is controlling the near-term direction of the market.
Based on the early price action and the current price at $1324.70, the direction of the June Comex gold futures contract the rest of the session is likely to be determined by trader reaction to the main 50% level at $1321.00.
A sustained move over $1321.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for buyers to take out last week’s high at $1226.30. This could trigger a surge into the main Fibonacci level at $1329.80. This is followed closely by a downtrending Gann angle at $1333.00.
A sustained move under $1321.00 will signal the presence of sellers. If this move creates enough downside momentum then look for a potential break into the uptrending Gann angle at $1311.50. This angle has been guiding the market higher since the main bottom was formed at $1287.50 on March 7.
If $1287.50 fails then look for a break into the downtrending Gann angle at $1310.00. This is a potential trigger point for an acceleration into the next uptrending Gann angle at $1299.50.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.