Gold Price Futures (GC) Technical Analysis – Needs to Hold $1706.90 to Sustain Upside Momentum

Gold futures are trading higher at the mid-session on Monday. Lower Treasury yields are helping to underpin prices, while demand for risky assets is helping to put a lid on gains.

I don’t think gold is going up because of safe-haven demand. I think that Treasury investors are increasing their bets for negative rates. Don’t be surprised if some of the Treasurys in the curve start indicating negative rates for late this year or early next year.

Although the Fed recently said they don’t foresee negative rates, the market and the Fed aren’t always on the same page.

The new outbreak of COVID-19 cases is raising fears that the economic recovery could slow so investors have to start pricing this in. If the cycle repeats then the government and the Fed will have to provide more stimuli. This should be supportive for gold.

At 16:26 GMT, August Comex gold is trading $1768.60, up $15.60 or +0.89%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend changed to up on a trade through $1761.00. The next target is the swing top at $1787.50. A trade through $1671.70 will change the main trend to down.

Daily Swing Chart Technical Forecast

Look for an upside bias as long as August Comex gold can hold above the 50% level at $1728.70.

Bullish traders may fear a closing price reversal top. This chart formation won’t mean the trend is changing. It only means the selling is greater than the buying at current price levels and investors may be trying to alleviate some of the upside pressure.

A failure at $1728.70 will be the first sign of weakness, while a trade through $1706.90 will signal a shift in momentum to down.

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