Gold Price Futures (GC) Technical Analysis – Rally Likely to Extend into $1970.10 to $1998.20
Gold futures hit their highest level since September 21 on Thursday as traders upped their bets that a Joe Biden victory in the very close U.S. presidential election would lead to larger fiscal stimulus packages. At least that’s what analysts told Reuters.
I tend to think gold futures traded higher because the U.S. Dollar crumbled against a basket of major currencies as investors lifted safe-haven hedges in the greenback. Before the election on Tuesday, investors were buying the U.S. Dollar and selling gold as a precaution against a contested election. Now that it looks like Joe Biden is the clear winner, President Trump will have a hard time tying up the results in court so there would be no need to hold onto the dollar as a hedge.
At 21:36 GMT, December Comex gold futures are trading $1949.50, up $53.30 or +2.81%.
The problem with thinking gold is going higher because of greater chances of bigger stimulus packages is flawed because Congress remains divided and it will be difficult for President Biden to pass any major stimulus bills. Let’s just say that there will probably be stimulus, but it will be much smaller than anticipated ahead of the election. The Democrats needed to sweep the election to gain control of everything and they did not.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up on Thursday when buyers took out the swing top at $1936.00 and was reaffirmed when $1939.40 was taken out. The new swing bottom is $1859.20. A trade through this bottom will change the main trend to down.
The minor trend is also up. A trade through $1881.80 will change the minor trend to down. This will shift momentum to the downside.
The main range is $2089.20 to $1851.00. Its retracement zone at $1970.10 to $1998.20 is the primary upside target. Look for profit-taking on the first test of this area.
On the downside, the first support is a 50% level at $1917.40, followed by $1889.70.
Our work suggests that if the upside momentum remains intact, the main 50% level at $1970.10 will become the next upside target. This will be followed by a main top at $1983.80 and a resistance cluster at $1998.20 to $2001.20.
The first minor support is the pair of old tops at $1939.40 and $1936.00. This is followed by the short-term 50% level at $1917.40.