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James Hyerczyk
Comex Gold
Comex Gold

December Comex Gold futures are under pressure on Tuesday. Traders could be reacting to a surge in the U.S. Dollar which is limiting demand for dollar-denominated gold. Traders could also be responding to higher Treasury yields which also tend to weigh on demand because the metal doesn’t pay interest.

The sell-off is confusing because it is also taking place during a time of heightened volatility in U.S. equity markets. It’s hard to believe that hedgers who bought gold as a safe-haven assets are taking profits on their positions. Perhaps they feel that the sell-off in stocks is overdone and the market is ripe for a rebound. Earlier in the session, gold hit its lowest level since October 15, nearly $25.00 off the high reached last Friday.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, two days of lower lows has helped form a new main top at $1246.00. The market isn’t close to changing the main trend to down. However, it is rapidly approaching a key short-term retracement zone.

Starting from the top, resistance is a 50% level at $1246.30. This is followed by a Fibonacci level at $1222.70. The market straddled this price earlier in the session.

The main range is $1184.30 to $1246.00. Its retracement zone at $1215.30 to $1208.00 is the primary downside target. This zone represents value. Since the main trend is up, buyers are likely to come in on a test of this zone.

Daily December Comex Gold
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Daily Technical Forecast

Based on the early price action, the direction of the December Comex Gold futures contract is likely to be determined by trader reaction to the 50% level at $1222.70.

A sustained move through $1222.70 will indicate the presence of sellers. If this move creates enough downside momentum, we could see a further plunge into the next 50% level at $1215.30. This is another trigger point for an acceleration to the downside with $1208.00 the next major target. Gann angle support comes in at $1206.30.

Holding $1222.70 and sustaining a rally will indicate the presence of buyers. This could fuel an intraday reversal into a pair of Gann angles at $1228.30 and $1230.00.

Overcoming $1230.00 will indicate the buying is getting stronger. This could trigger a further rally into $1235.80.

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