Gold Price Futures (GC) Technical Analysis – Near-Term Breakout into $1839.90 or Breakdown into $1754.50?
Gold futures are trading steady-to-better on low volume shortly before the release of the Federal Reserve’s monetary policy statement and Fed Chairman Jerome Powell’s press conference at 18:00 GMT.
Although the policymakers are not expected to make any major announcements, market participants will be looking out for any details on the central bank’s approach to tapering its asset purchases amid rising inflation and a spike in Delta variant COVID-19 cases.
At 17:14 GMT, December Comex gold futures are trading $1805.50, up $1.50 or +0.08%.
Ahead of the Fed, the risks for gold are skewed to the downside since discussion of tapering is considered a hawkish move.
Helping to provide some support for gold are lower Treasury yields. On Tuesday, real interest rates hit a record low. This is potentially bullish for gold since it usually signals expectations for a weaker economy.
However, in my opinion, gold is going to have a hard time sustaining a mid- to long-term rally until investors stop buying stocks. Too much capital is flowing into stocks, hurting demand for other investments like gold.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1839.00 will change the main trend to up. A move through $1793.10 will signal a resumption of the downtrend after weeks of sideways price action.
The minor trend is also down. A trade through $1814.05 will change the minor trend to up. This move will shift momentum to the upside.
The minor range is $1793.10 to $1814.50. Gold is currently straddling its pivot at $1803.80.
On the downside, potential support is a pair of retracement levels at $1795.00 and $1786.80. The latter is a potential trigger point for an acceleration to the downside.
On the upside, resistance is a 50% level at $1816.10. This is also a potential trigger point for an acceleration to the upside.
Daily Swing Chart Technical Forecast
The direction of the December Comex gold market on Wednesday is likely to be determined by trader reaction to $1803.80.
Look for an upside bias to develop on a sustained move over $1803.80. This could trigger a quick surge into $1814.50 and $1816.10.
Taking out $1816.50 on strong volume could trigger an acceleration into the resistance cluster at $1839.00 to $1839.90.
A sustained move under $1803.80 will signal the presence of sellers. This could drive the market into $1795.00, followed by $1793.10.
Taking out $1793.10 will target $1786.80. This price is a potential trigger point for an acceleration into $1754.50 over the short-term.