Gold Price Futures (GC) Technical Analysis – Market Rebounds after Test of Key 50% Level at $1781.00

Gold futures are in a position to close higher late Wednesday after dropping to a three-week low earlier in the session. Shorts likely covered and new buyers may have stepped in when the market tested the top end of an important retracement zone. The move may have also been fueled by profit-taking and position-squaring ahead of what could be a long U.S. holiday weekend.

At 21:22 GMT, February Comex gold futures are trading $1791.40, up $5.10 or +0.29%.

The early selling pressure was generated by robust U.S. economic data that lifted U.S. Treasury yields and consequently the U.S. Dollar. Additionally, gold investors continued to be rattled by the threat of increased tapering and a sooner-than-expected post-pandemic interest rate hike from the U.S. Federal Reserve.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the confirmation of the closing price reversal top on November 16.

A trade through $1761.00 will change the main trend to down, while a move through $1881.90 will negate the closing price reversal top and signal a resumption of the uptrend.

The main range is $1680.00 to $1881.90. Its retracement zone at $1781.00 to $1757.10 has the potential to turn into major support.

On the upside, potential resistance levels come in at $1802.80, $1821.50 and $1831.10. A rally into $1831.10 will represent a normal 50% retracement of the break from $1881.90 to $1780.20.

Daily Swing Chart Technical Forecast

Ahead of Thursday’s U.S. Thanksgiving holiday and Friday’s expected low-volume session, we were looking for shorts to cover and new buyers to show up on a test of $1781.00 to $1757.10. Unfortunately, we weren’t expecting them to come in at $1780.20 and form a potentially bullish closing price reversal bottom.

If the test of $1781.00 and the subsequent higher close represents legitimate buying then we could see a stair-step rally into $1802.80, followed by $1821.50 then eventually $1831.10.

If the test of $1781.00 wasn’t enough to convince the shorts to cover or new buyers to step in then look for another test of the $1781.00 to $1757.10 retracement zone when trading resumes on Friday or Monday.