December Comex Gold futures are trading higher shortly before the regular session opening, mostly in response to a weaker U.S. Dollar. However, we could be looking at a short-covering rally being fueled by position-squaring and profit-taking ahead of today’s ADP private sector employment report, a service PMI report and Fed Chair Janet Yellen’s speech late in the session.
Speculation that President Trump may appoint a dovish Fed Chair to replace current Fed Chair Janet Yellen is also underpinning the market.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The early price action has made $1271.00 a new minor bottom.
A trade through $1271.00 will signal a resumption of the downtrend.
The market is currently sitting inside a major retracement zone at $1286.80 to $1268.90. Tuesday’s low at $1271.00 stopped just short of the major Fibonacci level at $1268.90.
Overcoming the 50% level at $1286.80 will indicate the buying is getting stronger. This could trigger an acceleration into the short-term retracement zone at $1294.10 to $1299.50. This is the primary upside target.
Daily Forecast
Based on the current price at $1278.50 (0949 GMT) and the earlier price action, the direction of the gold market today is likely to be determined by trader reaction to the uptrending angle at $1275.00.
A sustained move over $1275.00 will indicate the presence of buyers. The daily chart indicates the first target is $1286.80, followed by a downtrending angle at $1275.00.
If $1275.00 fails as support then look for a break into a pair of uptrending angles at $1273.00 and $1272.00. The latter is the last potential support angle before the $1271.00 main bottom.
Keep in mind that we’re looking at a possible short-covering rally and that the trend is still down. The chart pattern suggests we could see a shift in momentum to the upside.