Gold Price Futures (GC) Technical Analysis – Prolonged Sideways Trade Suggests Impending Volatility

August Comex Gold futures settled lower on Tuesday. The market may have been pressured by the deal between the United States and North Korea that could bring peace to the Korean peninsula. This may have diminished gold’s appeal as a safe haven asset. Traders may have also reacted to a rise in U.S. Treasury yields after the government reported solid consumer inflation data. Finally, position-squaring ahead of the Fed’s monetary policy statement, interest rate decision and economic projections probably drove most of the price action.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The market has been consolidating for a little over a month which usually indicates investor indecision and impending volatility.

The minor trend is also down which means momentum is trending lower. A trade through $1307.00 will change the minor trend to up and shift momentum to the upside. A trade through $1296.00 will mean the selling is getting stronger.

The major retracement zone is $1315.60 to $1300.60. This zone is controlling the near-term direction of the market. Currently, the market is straddling the lower or Fibonacci level of the zone at $1300.60.

The main range is $1332.40 to $1286.80. Its retracement zone at $1309.60 to $1315.00 is the primary upside target.

The combination of the two retracement zones forms a resistance cluster at $1315.00 to $1315.60.

Daily Swing Chart Technical Forecast

Based on Tuesday’s close at $1299.60, the direction of the August Comex Gold futures contract on Wednesday is likely to be determined by trader reaction to the Fib level at $1300.60.

A sustained move under $1300.60 will indicate the presence of sellers. This could lead to a quick break into the minor bottom at $1296.00. This could trigger further weakness into minor bottoms at $1293.10 and $1292.00. The latter is a trigger point for an acceleration into the main bottom at $1286.80.

A sustained move over $1300.60 will signal the presence of buyers. If this move can generate enough upside momentum, then look for a drive into a pair of minor tops at $1307.00 and $1307.80, followed by the 50% level at $1309.60.