Gold Price Futures (GC) Technical Analysis – Mixed Treasurys, Dollar Could Fuel Two-Sided Trade

Gold futures are trading slightly lower on Friday after testing its lowest level since February 4 earlier in the session. The market has clawed back most of its overnight loss with the help of a weaker U.S. Dollar, but firming U.S. Treasury yields are putting a lid on its gains. At its current price, gold is in a position to post its fourth straight weekly decline.

At 09:36 GMT, June Comex gold futures are trading $1822.20, down $2.40 or -0.13%. This is up from an intraday low of $1809.10. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $170.14, down $2.68 or -1.55%.

Treasury Yield Bounce, US Dollar Dip

U.S. Treasury prices slipped on Friday, seeing yields jump, as investors sold out of government bonds and looked to move back into stock market. That’s just a fancy way of saying stock market investors are looking for a positive change in sentiment, which will dampen the need for the safe-haven U.S. Treasurys. Higher yields, however, tend to make non-yielding gold a less-desirable investment.

The strength in U.S. stock index futures overnight may be an early sign that risk is on, which is encouraging traders who bought the greenback earlier in the week for protection to liquidate those positions.

If gold traders decide to react to higher yields then gains are likely to be limited and the market may fall further. If gold traders decide to react to the weaker U.S. Dollar then we could see an intraday short-covering rally.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at $1809.10 will signal a resumption of the downtrend. A move through $1910.70 will change the main trend to up.

The minor range is also down. A trade through $1858.80 will change the minor trend to up. This will shift momentum to the upside.

The minor range is $1910.70 to $1809.10. Its pivot at $1859.90 is the nearest resistance.

The main resistance is a short-term Fibonacci level at $1897.70, followed by a long-term 50% level at $1908.10.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold market on Friday is likely to be determined by trader reaction to $1824.60.

Bearish Scenario

A sustained move under $1824.60 will indicate the presence of sellers. Taking out $1809.10 will indicate the selling pressure is getting stronger. This could trigger an acceleration into the February 3 main bottom at $1791.60, followed by the January 28 main bottom at $1783.80.

Bullish Scenario

A sustained move over $1824.60 will signal the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into the resistance cluster at $1858.80 – $1859.90. Overtaking the latter could trigger a near-term acceleration into the resistance cluster at $1897.70 – $1910.70.