Gold Price Futures (GC) Technical Analysis – October 3, 2018 Forecast

Gold futures are edging higher early Tuesday, just one day after safe-haven demand drove the market 1.27% higher. The catalyst behind the rally was an escalating budget conflict between Italy and the European Union. The move caught bearish traders by surprise because the U.S. Dollar was also trending higher, forcing them to cover short positions aggressively.

By the way, the correlation between the U.S. Dollar and Gold is based on a long-term study. They can trade in the same direction in the short-term.

At 0537 GMT, December Comex Gold futures are trading $1209.70, up $2.70 or +0.22%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside with the formation of the closing price reversal bottom on September 28 and its subsequent confirmation on Tuesday.

A trade through $1215.80 will change the main trend to up. This is followed by main tops at $1218.00 and $1220.70. A move through $1184.30 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is $1244.70 to $1167.10. The market is currently trading inside its retracement zone at $1205.90 to $1215.10. Trader reaction to this zone will determine the near-term direction of the market.

The intermediate range is $1167.10 to $1220.70. Its retracement zone at $1193.90 to $1187.60 is support.

The short-term range is $1215.80 to $1184.30. Its 50% level or pivot at $1200.10 is also support.

Daily Technical Forecast

Based on yesterday’s close at $1207.00 and the earlier price action, the direction of the December Comex Gold market on Wednesday is likely to be determined by trader reaction to the main 50% level at $1205.90.

A sustained move over $1205.90 will indicate the presence of buyers. If this creates enough upside momentum then look for a drive into the resistance cluster at $1215.10 to $1215.80, this is followed by a downtrending Gann angle at $1219.20.

Sellers could come in on the first test of $1219.20. However, look for an acceleration to the upside if buyers take out this angle with conviction. This could trigger a further rally into the next downtrending Gann angle at $1232.00. This is the last potential resistance angle before the $1244.70 main top.

A sustained move under $1205.90 will signal the presence of sellers. This could trigger a break into a support cluster at $1200.10. Buyers may step in on a test of this price.

If $1200.10 fails as support then look for the selling to extend into $1187.60, followed by $1184.30 and $1183.60.

This is the fourth time since August 16 that gold has visited the $1205.90 to $1215.10 retracement zone. If buying volume picks up then look for a strong breakout to the upside.