Gold Price Futures (GC) Technical Analysis – Needs to Clear Series of Retracement Levels to Sustain Rally

Gold futures rallied on Friday to its highest level since April 16. More importantly, it posted its best week in 12, on route to a potentially bullish closing price reversal bottom. The catalyst behind the rally was a weaker U.S. Dollar, The Greenback fell despite blowout first-quarter growth amid muted U.S. inflation data. The rally came as a surprise because demand for higher-risk assets continued to climb. A decline in the benchmark 10-year U.S. Treasury yield also helped underpin gold prices.

On Friday, June Comex gold futures settled at $1288.80, up $9.10 or +0.71%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Momentum is trending higher, however. The main trend will change to up on a trade through $1314.70. A trade through $1267.90 will signal a resumption of the downtrend.

The minor trend is up. It turned up on Thursday when buyers took out the minor top at $1281.90. This move shifted momentum to the upside.

The major support is a long-term retracement zone at $1272.70 to $1253.00. Last week’s low at $1267.90 stopped inside this zone.

The short-term range is $1314.70 to $1267.90. It retracement zone is $1291.30 to $1296.90. Inside this zone is last year’s close at $1294.20. Since the main trend is down, sellers could come in on the initial test of this area.

The main range is $1330.80 to $1267.90. Its retracement zone at $1299.40 to $1306.80 falls inside another major retracement zone at $1299.80 to $1325.90. This zone was created by the $1410.30 to $1189.30 contract range.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and close at $1288.80, the direction of the June Comex gold futures contract on Monday is likely to be determined by trader reaction to the short-term 50% level at $1291.30.

Bullish Scenario

A sustained move over $1291.30 will indicate the presence of buyers. This is likely to trigger a labored rally because of the series of retracement and potential resistance levels at $1294.20, $1296.90, $1299.40 and $1299.80.

Overtaking $1299.80 could trigger an acceleration to the upside with the next target a Fibonacci level at $1306.80 and a main top at $1314.70.

Bearish Scenario

A sustained move under $1291.30 will signal the presence of sellers. This could lead to a retracement of the rally from $1267.90 to $1290.90. As of Friday’s close, that target is $1279.40. This is followed by the major 50% level at $1272.70 and the main bottom at $1267.90.