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James Hyerczyk
Comex Gold

Gold futures are up nearly 1 percent late Thursday after hitting a low at $1269.00 earlier in the week inside a longer-term retracement zone and slightly above the $1267.30 main bottom. The market received a boost from a combination of lower Treasury yields, a drop in demand for risky assets and a reversal to the downside by the U.S. Dollar.

At 18:40 GMT, June Comex Gold is trading $1284.90, up $10.70 or +0.84%.

The price action on Thursday is critical because it confirms what I’ve been saying for weeks, gold needs lower rates, a weaker dollar and a plunge in demand for stocks to generate any upside momentum since it is an investment and not a safe-haven asset. Something has to happen in the other asset classes to make gold a more attractive investment.

Daily June Comex Gold

Daily Swing Chart Technical Analysis

The main trend is actually up according to the daily swing chart, however, momentum has been trending lower since the formation of a closing price reversal top at $1304.20 on May 14.

A trade through $1267.30 will change the main trend to down. A move through $1304.20 will signal a resumption of the uptrend.

Gold is currently surrounded by a pair of major retracement zones. On the downside, the support zone is $1272.70 to $1253.00. On the upside, the resistance area is $1299.80 to $1325.90. This areas are controlling the longer-term direction of gold.

The short-term range is $1304.20 to $1269.00. Its retracement zone is $1286.60 to $1290.70. The lower or 50% level at $1286.60 provided resistance earlier on Thursday at $1287.10.

Additional resistance or a pivot level is last year’s close at $1294.20.

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Daily Swing Chart Technical Forecast

Based on the earlier price action and the current price at $1284.90, the direction of the June Comex gold futures contract the rest of the session is likely to be determined by trader reaction to the short-term 50% level at $1286.60.

Bullish Scenario

A sustained move over $1286.60 will indicate the presence of buyers. This could trigger a rally into the short-term Fibonacci level at $1290.70 and the December 31, 2018 main close at $1294.20. Overcoming these level will indicate the buying is getting stronger.

Look for a surge to the upside if $1294.20 is taken out. This could drive the gold market into $1299.80 then $1304.20. Taking out $1304.20 will negate the closing price reversal top and signal a resumption of the uptrend. This is a potential trigger point for an acceleration to the upside with $1325.90 the target.

Bearish Scenario

A sustained move under $1272.70 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into $1272.70, followed by $1269.00 and $1267.30.

Overview

Gold seems to be developing a support base between $1267.30 and $1272.70, but it has to overcome the retracement zone at $1286.60 to $1290.70 to generate some upside excitement. Otherwise, a secondary lower top will form inside this zone and the downtrend will eventually resume.

Rolling to August Comex Gold on Friday.

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