Gold Price Futures (GC) Technical Analysis – Mixed Fundamentals Holding It in a Range

August Comex gold traded higher on Wednesday, but the price action was weak. The market attempted a rally which would have put it in a position to challenge the top at $1260.00 and perhaps lead to a change in trend, however, sellers came in to stop the move.

Under normal trading conditions, gold would have been surging in reaction to another sell-off by the U.S. Dollar. However, a huge rally in the stock market prevented the rally from taking place. In addition to the increased demand for higher-risk assets, the threat of another interest rate hike by the Fed before the end of the year also weighed on prices.

Earlier today, the gold market showed little reaction to the Goods Trade Balance report which came in slightly better than expected at -65.9 billion. Preliminary Wholesale Inventories came in slightly better than expected at 0.3% versus the 0.2% forecast. Pending Home Sales totally missed the forecast with a reading or -0.8%. Traders were looking for an increase of 0.9%.

The market continued to trade inside Monday’s “flash crash” range which suggests traders still haven’t gotten over the volatility caused by the move.

Technical Analysis

The main trend is down according to the daily swing chart. The trend will change to up on a trade through $1260.00. A move through $1236.50 will signal a resumption of the downtrend.

The main range is $1217.80 to $1298.80. Its retracement zone is $1258.30 to $1248.70. For a fifth straight session, gold straddled this range. This suggests it has reached a balance area. The next major move in gold will be determined by trader reaction to the retracement zone.

The short-term range is $1298.80 to $1236.50. If there is a breakout to the upside then we should see a rally into its retracement zone at $1267.70 to $1275.00.

It’s probably better to sit on the sidelines until the gold chart starts to tell us which way traders are leaning.