Gold Price Futures (GC) Technical Analysis – Poised to Rally, but Needs Stronger Buying Volume

Gold futures are edging higher at the mid-session and threatening to take out its earlier intraday high. Volume is light, opening up the possibility of whip-saw or even exaggerated moves. Underpinning the market is expectations of a 25-basis point rate cut by the Fed at the end of the month. Since June 25, however, the trade has been sideways-to-lower due to the lack of support for a more aggressive 50-point rate hike. Today’s price action seems to be related to weaker Treasury yields and U.S. Dollar.

At 16:02 GMT, August Comex gold futures are trading $1430.60, up $7.30 or +0.48%.

There is a bias to the upside and when combined with the nearly month-long sideways trade, we could be set up for a breakout rally. The only thing I’m concerned about is the low volume. A breakout rally could fail on low volume, and prices could come down just as fast as they went up.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A rally through today’s intraday high at $1431.90 will reaffirm the uptrend. This could lead to a drive into a pair of tops at $1441.00 and $1442.90. The latter could be the trigger point for an acceleration to the upside if the buying volume is strong.

A trade through $1401.30 will change the main trend to down. This could trigger a further break into a pair of main bottoms at $1387.50 and $1384.70.

The short-term range is $1442.90 to $1384.70. Its 50% level or pivot at $1413.80 is providing support today.

Daily Technical Forecast

Based on the early trade and the current price at $1430.60, the direction of the August Comex gold futures market the rest of the session on Thursday is likely to be determined by trader reaction to a pair of Gann angles at $1427.60 and $1426.90.

Bullish Scenario

A sustained move over $1427.60 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the resistance cluster at $1434.60 to $1434.90. The latter is the last potential resistance before the $1441.00 and $1442.90 main tops.

Taking out $1442.90 could trigger an acceleration to the upside if there is volume behind the move.

Bearish Scenario

A sustained move under $1426.90 will signal the presence of sellers. The daily chart is wide open under this level with the next target angle coming in at $1415.50, followed closely by the short-term pivot at $1413.80.

The pivot at $1413.80 is another trigger point for a potential steep break with downside targets coming in at $1401.50 and $1401.50.

Overview

I’m leading to the upside because a buyers seems to be defending the market against a break. However, the market still needs strong volume to trigger an upside breakout. If the buyers pulls his bid, this market could plunge late in the session.