Gold Price Futures (GC) Technical Analysis – New Contract High, but Buyers Remain Tentative at Current Price Levels

Gold futures finished higher on Wednesday after hitting a multi-year high earlier in the session. Buyers took out last week’s high at $1565.00 without much upside momentum, stalling at $1566.20. Since rallying from $1412.10 to $1546.10 between August 1 and August 13, gold has put in two new highs at $1565.00 and $1566.20, but each drive into a new high has taken place on very light buying volume.

Sometimes it’s hard to tell if the moves are being generated by new longs or by buy stops. It makes a difference because one is adding new buyers, while the other is taking out weak short-sellers.

On Wednesday, December Comex gold settled at $1560.40, up $4.50 or +0.29%.

Underpinning prices were lower Treasury yields and a weaker U.S. Dollar. Perhaps helping to cap gains were increased demand for risky assets and the shedding of safe-haven assets due to the easing of geopolitical concerns over Hong Kong, Italy and Brexit.

Certainly, the rapid changing events this week may be confusing gold traders. However, I think if you follow the U.S. Dollar, you’ll have a better edge than trying to react to the headlines.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Wednesday when buyers took out the last swing top at $1565.00. A trade through $1525.60.

The minor range is $1525.60 to $1566.20. Its 50% level or pivot at $1545.90 is early support.

The second minor range is $1488.90 to $1566.20. Its retracement zone at $1527.60 to $1518.40 is a more important support zone because the main bottom at $1525.60 is inside this zone.

The main range is $1412.10 to $1566.20. If the main trend changes to down on a move through $1525.60 then its retracement zone at $1489.10 to $1471.00 will become the primary downside target.

Daily Technical Forecast

We’re going to put all our weight on the minor pivot at $1545.90 on Thursday. Basically, sentiment will remain bullish if it holds as support, while the bias will shift to the downside if it fails.

Bullish Scenario

A sustained move over $1545.90 will continue to indicate the presence of buyers. If this can create enough upside momentum then look for a drive into yesterday’s high at $1566.20.

If the buying is strong enough to overcome $1566.20 then look for the buying to possibly extend into the uptrending Gann angle at $1380.40. Crossing to the strong side of this angle will put December Comex gold in an extremely bullish position.

Bearish Scenario

A sustained move under $1545.90 will signal the presence of sellers. This could trigger an acceleration to the downside with the first target a 50% level at $1527.60, followed by a main bottom at $1525.60 and a 61.8% level at $1518.40.

If this area fails as support then this will indicate the short-sellers have taken control.