Gold Price Futures (GC) Technical Analysis – Minor Trend Changes to Up on Trade Through $1244.70

Gold futures are trading slightly higher early Wednesday, picking up some light-countertrend buying related to lower Treasury yields, a weaker dollar and a dip in demand for risky assets like stocks.

At 455 GMT, December Comex Gold is trading $1235.60, up $1.00 or +0.08%.

There is a development in the gold market that we are watching because it is often a very good contrarian indicator. Hedge funds and money managers switched to a net short position in COMEX gold contracts for the first time since 2016 in the week to July 17, U.S. Commodity Futures Trading Commission (CFTC) data showed last Friday.

We believe this could develop into a good indicator of aggressive counter-trend buying in the near future. However, we don’t know the catalyst at this time that could drive out the short-sellers and bring in the new buyers. We’ll let Treasury yields, the Dollar and appetite for risk dictate the price action rather than speculate at this time.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1221.00 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $1244.70 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is $1221.00 to $1244.70. Its 50% level or pivot at $1232.90 is controlling the short-term price action.

The main range is $1278.20 to $1221.00. If the minor trend changes to up on the move through $1244.70 then look for a test of the retracement zone at $1249.60 to $1256.30. Since the main trend is down, sellers could show up on a test of this zone. Overtaking this area will shift longer-term momentum to the upside.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the December Comex Gold market on Wednesday will be determined by trader reaction to the pivot at $1232.90.

A sustained move over $1232.90 will indicate the presence of counter-trend buyers. If this generates enough upside momentum, look for a drive into $1244.70 then $1249.60.

A sustained move under $1232.90 will signal the presence of sellers. Taking out $1227.00 will indicate the selling is getting stronger. This could lead to an extension of the break into the main bottom at $1221.00.