Gold Price Futures (GC) Technical Analysis – On Track to Challenge $1890.00 – $1900.30 Resistance Zone

Gold futures are trading at their highest level since May 9 as falling Treasury yields helped pressure the U.S. Dollar. Gold tends to benefit from a drop in yields because it reduces the opportunity cost of holding the non-yielding asset. Additionally, a weaker greenback tends to drive foreign demand for the dollar-denominated asset.

At 16:46 GMT, August Comex gold futures are trading $1872.60, up $18.70 or +1.01%. The SPDR Gold Shares ETF (GLD) is at $174.19, up $1.36 or +0.79%.

Helping to pressure Treasury yields were weaker than expected U.S. economic reports and another round of selling in the equity markets.

While the Flash Manufacturing PMI came in as expected, the Flash Services PMI missed badly, coming in at 53.5 versus a 55.1 forecast. Additionally, the Richmond Manufacturing Index fell 9 points versus a 9 point growth estimate. Finally, New Home Sales also missed badly, coming in at 591K versus an estimate of 751K.

The market can deal with the New Home Sales miss, but the lower than expected Flash Services PMI and the Richmond Manufacturing Index can cause issues with the Fed’s plan to aggressively raise rates. Treasury and gold traders are making adjustments to their short positions in reaction to this news.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $1917.60 will change the main trend to up. A move through $1792.00 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through $1811.70 will change the minor trend to down.

On the downside, the support is a minor pivot at $1854.80 and a long-term Fibonacci level at $1844.00.

On the upside, the nearest resistance is a pair of 50% levels at $1890.00 and $1900.30.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at $1858.10 will determine the direction of the August Comex gold market into the close on Tuesday.

Bullish Scenario

A sustained move over $1858.10 will indicate the presence of buyers. Taking out the intraday high at $1875.00 will indicate the buying is getting stronger. This could trigger a late session rally into $1890.00 – $1900.30. This zone is the last potential resistance before the $1917.60 main top.

Bearish Scenario

A sustained move under $1858.10 will signal the presence of sellers. The first target is $1854.80, followed by $1844.00.

If $1844.00 fails to hold then look for the selling to possibly extend into a minor pivot at $1833.50.