Gold Price Futures (GC) Technical Analysis – May Be Trying to Build Support Base Inside $1798.80 – $1770.40

Gold futures are inching higher early Tuesday, helped by a dip in U.S. Treasury yields and a pullback in the U.S. Dollar against a basket of major currencies. Meanwhile, trading is being dampened by general nervousness ahead of U.S. Federal Reserve Chairman Jerome Powell’s testimony to Congress at 18:00 GMT.

At 02:34 GMT, August Comex gold is trading $1786.70, up $3.80 or +0.21%.

Treasury yields dipped because early stock market weakness drove investors into the safety of the U.S. bond market. The move helped support gold. The market gave back some of its gains as a stock market recovery drove yields up from their lows.

The dollar also weakened as stocks rose, dampening the greenback’s appeal as a safe-haven asset. This helped underpin prices, but gains were capped.

We could see volatility in gold this week because the dollar is wearing two hats. It is being underpinned by the hawkish Fed announcements. But it also becomes a safe-haven when stocks break sharply.

This explains why we saw gold and stocks higher on Monday. Both rallied when some traders dumped their safe-haven buys in the dollar. Don’t look at the move as being unusual, just accept that those are the conditions gold traders have to deal with at this time.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1761.20 will signal a resumption of the downtrend.

A trade through $1906.90 will change the main trend to up. This is highly unlikely but there is room for a normal counter-trend correction.

The main range is $1678.40 to $1919.20. The market is currently trading inside its retracement zone at $1798.80 to $1770.40. Counter-trend buyers appear to be trying to form a support base.

On the upside, a pair of 50% levels at $1822.40 and $1838.00 are potential resistance points. Since the trend is down, look for sellers on the first test of those levels.

Daily Swing Chart Technical Forecast

The direction of the August Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the main Fibonacci level at $1770.40.

Bullish Scenario

A sustained move over $1770.40 will indicate the presence of counter-trend buyers. The first upside target is the main 50% level at $1798.80. Overcoming this level could create the upside momentum needed to challenge the pair of 50% levels at $1822.40 and $1838.00.

Bearish Scenario

A sustained move under $1770.40 will signal the presence of sellers. The first downside targets are last week’s low at $1761.20, followed by the April 29 main bottom at $1756.80. The latter is a potential trigger point for an acceleration into the April 13 main bottom at $1725.50.