Gold Price Futures (GC) Technical Analysis – May 2, 2018 Forecast

Short-covering and profit-taking ahead of the release of the Fed’s interest rate decision and monetary policy statement at 1800 GMT is helping to underpin June Comex Gold futures on Wednesday.

The central bank is widely expected to leave rates unchanged. However, it could drop hints as to the strength of the economy, expected inflation levels and the number of future rate hikes.

Currently, the market is pricing in two rate hikes this year. If the Fed increases the number then we could see further downside pressure in gold.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1302.30 will signal a resumption of the downtrend.

The market isn’t in a position to change the trend to up, but we could see the formation of a closing price reversal bottom. This could lead to a 2 to 3 day correction, designed to alleviate some of the downside pressure.

The market is currently trading inside a major 50% to 61.8% retracement zone. The top of the zone is $1311.40, the bottom is $1296.20. These levels are resistance and support respectively.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the gold market today is likely to be determined by trader reaction to the 50% level at $1311.40.

A sustained move under $1311.40 will indicate the presence of sellers. This could drive the market through yesterday’s low at $1302.30 and into the Fibonacci level at $1296.20.

Gold is vulnerable under $1296.20. The daily chart indicates there is room to the downside with $1247.20 the next major target.

A sustained move over $1311.40 will signal the presence of buyers. If this move gains traction because of aggressive counter-trend buying, we could see an eventual short-covering rally into at least $1335.80 over the near-term.