Gold Price Futures (GC) Technical Analysis – More Volatility Coming with $1166.60 Next Downside Target

Gold futures hit an 18-month low early Wednesday as investors continued to dump the dollar-denominated asset as the U.S. Dollar moved towards its highest level in over a year. Fear of global market contagion drove the greenback higher as sellers continued to express concerns over emerging markets.

At 1845 GMT, December Comex Gold is trading $1184.50, down $16.20 or -1.35%.

Daily Technical Analysis

Gold has been in a freefall since Monday after it breached the August 3 bottom at $1212.50. The move, however, came as no surprise since the daily chart indicated plenty of room to the downside with the January 3, 2017 main bottom at $1184.00 the next major downside target.

Due to the prolonged move down in terms of price and time, the only chart pattern that can safe this market from breaking further is a closing price reversal bottom. And that’s not likely to happen unless the market finishes over yesterday’s close at $1200.70.

Daily Technical Forecast

Based on the current price at $1184.50, the direction of the December Comex Gold market into the close is likely to be determined by trader reaction to the former bottom at $1184.00.

A sustained move over $1184.00 will indicate the presence of buyers. It will also suggest that today’s sell-off was exhaustion.

A sustained move under $1184.00 will signal the presence of sellers. If this move creates enough downside momentum then look for a drive into the steep downtrending Gann angle at $1176.70.

Crossing to the weak side of this angle will confirm the bearish tone and set up the market for a further drive into the December 22, 2016 main bottom at $1166.60. This is followed closely by the December 16, 2016 main bottom at $1162.00.

Now that we’ve tested $1184.00, volatility is expected to pick up since there is plenty of room in both directions with $1210.70 a potential upside target and $1166.60 the next downside target.