Gold Price Futures (GC) Technical Analysis – Pivot at $1954.80 Controlling Short-Term Direction

Gold futures are trading higher late in the session on Tuesday after posting a dramatic midday reversal to the upside. The move may have been fueled by a drop in Treasury yields or a wave of speculative buying as he market approached a major value area.

Earlier in the session, the market plunged to a two-week low after the U.S. Dollar Index spiked to the upside, driven by a weaker Euro and British Pound.

At 18:17 GMT, December Comex gold is trading $1943.30, up $9.00 or +0.47%. This is up from an intraday low of $1911.70. The last time gold was this low was on August 26, the day it formed a short-term bottom at $1908.40.

On the fundamental side, Treasury yields fell on Tuesday as a continuing sell-off in equities pushed investors into safer assets. The move in the stock market boosted demand for Treasuries, even though heavy supply this week is expected to weigh on the bonds (i.e. increase yields).

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $1908.40 will change the main trend to down. A move through 2001.20 will signal a resumption of the uptrend.

The main retracement zone support is $1889.70 to $1842.60. This zone stopped the selling at $1874.20 on August 12.

The minor range is $1908.40 to $2001.20. Its 50% level at $1954.80 is the first upside target.

The short-term range is $2089.20 to $1874.20. Its retracement zone at $1981.70 to $2007.10 is the main resistance. The last rally at $2001.20 was stopped by this zone on September 1.

Short-Term Outlook

Today’s rally is impressive, but all it may be indicating is that short-term buyers are willing to defend the uptrend. From a value standpoint, it would have been more impressive if it occurred following a test of $1889.70 to $1842.60.

The market has closed below the pivot at $1954.80 the last four sessions. Late in the day on Tuesday, it’s also trading below this level. Therefore, I have to conclude that a close over $1954.80 today will be most impressive and could even trigger a rally into at least $1981.70 to $2007.10 over the near-term.