Gold Price Futures (GC) Technical Analysis – Plenty of Room to Downside, but Also Ripe for Reversal Bottom

Gold futures finished lower last week. The weakness was fueled by a stronger U.S. Dollar, which helped drive down foreign demand for the dollar-denominated gold market. The catalysts behind the selling pressure was aversion to risky assets which drove investors into the safe-haven dollar, and solid domestic inflation data which raised expectations for additional rate hikes by the Fed later this year.

Last week, December Comex gold futures settled at $1219.00, down $4.20 or -0.34%.

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. The market is in no position to change the trend to up, but due to the prolonged move down in terms of price and time, gold is inside the window of time for a potentially bullish closing price reversal bottom. Since hedge fund and money managers are net short gold, some unexpected news could spark a short-covering rally.

A trade through $1212.50 will signal a resumption of the downtrend after a week of consolidation.

The minor trend is also down. A move through $1278.20 will change the minor trend to up.

Weekly Swing Chart Technical Forecast

Since December Comex gold is inside the window of time for a potentially bullish closing price reversal bottom, we’re going to use last week’s close at $1219.00 as our pivot this week.

A sustained move under $1219.00 will indicate the presence of sellers. Taking out $1212.50 will confirm the downtrend. The daily chart indicates there is plenty of room to the downside under this low so we could see the start of an acceleration to the downside with the December 15, 2016 main bottom at $1162.00 the next likely target.

A sustained move over $1219.00 will signal the presence of buyers. If this move generates enough upside momentum then look for a possible rally into the long-term downtrending Gann angle at $1244.10.

The angle at $1244.10, moving down at a rate of $8.00 per week since the main top at $1388.10, has been guiding the gold market lower for 18 weeks or since the week-ending April 13. We could see a technical bounce on the first test of this angle, but overtaking it could trigger an acceleration to the upside.