Gold Price Futures (GC) Technical Analysis – Potentially Bearish Secondary Lower Top Formed at $1761.00

Gold prices are lower on Wednesday as global equity markets firmed on economic optimism and hopes for further stimulus measures boosted risk-on sentiment.

Asian equities followed Wall Street higher on Wednesday on the hopes of more government stimulus. Stocks in the U.S., Europe and emerging markets all hit their highest levels since early March.

Traders are also hoping that the European Central Bank delivers additional stimulus, by around 900 billion Euros, when it meets on Thursday.

Finally, some sort of coronavirus vaccine could be expected to be available to part of the U.S. population by the end of the year, a senior U.S. Army vaccine researcher said.

As stock prices rise, gold loses more of its safe-haven appeal. Some investors are shedding hedge positions placed in gold and moving the funds into higher-yielding assets. Perhaps helping to limit-losses in dollar-denominated gold is the weaker U.S. Dollar. The greenback is also losing its appeal as a safe-haven asset.

At 06:31 GMT, August Comex gold is trading $1727.60, down $6.40 or -0.37%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending low. Additionally, the formation of a secondary lower top suggests the trend may be getting ready to turn down.

A trade through $1701.60 will change the main trend to down. A move through $1761.00 will signal a resumption of the downtrend.

The first short-term range is $1787.50 to $1701.60. Its retracement zone at $1744.60 to $1754.70 is resistance.

The second short-term range is $1789.00 to $1668.40. Its 50% level at $1728.70 is potential support. The market is currently straddling this level.

The main range is $1454.80 to $1789.00. Its retracement zone at $1621.90 to $1582.40 is the primary downside target.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $1727.60, the direction of the August Comex gold futures contract the rest of the session on Wednesday is likely to be determined by trader reaction to the 50% level at $1728.70.

Bearish Scenario

A sustained move under $1728.70 will indicate the presence of sellers. If this move creates enough downside momentum then look for a potential break into the main bottom at $1701.60.

The main trend will change to down on a trade through $1701.60. If this fails then look for the selling to possibly extend into the pair of main bottoms at $1683.30 and $1668.40 over the near-term.

Bullish Scenario

A sustained move over $1728.70 will indicate that buyers are going in to defend gold against a steep break. This could trigger a labored rally with potential upside targets $1744.60, $1754.70 and $1761.00.

Taking out $1761.00 could trigger a spike into $1787.50, followed closely by $1789.00.