Gold Price Futures (GC) Technical Analysis – Rangebound Amid Rate Hike, Recession Worries

Gold futures are edging higher on Monday as traders assess the impact of a G7 ban on bullion imports from Russia. The move is likely just a knee jerk reaction to the development since many of the major gold centers around the world have been shunning Russian gold since March 25.

Four of the Group of Seven (G7) rich nations moved to ban imports of Russian gold on Sunday to tighten the sanction squeeze on Moscow and cut off its means of financing the invasion of Ukraine, according to Reuters.

At 09:30 GMT, August Comex gold is trading $1839.70, up $9.40 or +0.51%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $169.99, down $0.27 or -0.16%.

Today’s reaction to the ban on Russian bullion is likely to be short-lived with traders returning quickly to the more traditional influences on gold prices:  rate hikes and recession. Gold traders are also waiting for U.S. Dollar investors to get off the fence and pick a direction for the next major moves. Gold is a dollar-denominated commodity so it will react to any volatility by the greenback.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1861.50 will change the main trend to up. A move through $1806.10 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $1850.30 will change the minor trend to up. This will shift the momentum. A trade through the minor bottom at $1817.77 will reaffirm the downtrend.

On the downside, the support is a retracement zone at $1837.30 to $1826.60. On the upside, the resistance is a long-term Fibonacci level at $1844.00 and a short-term 50% level at $1854.80.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term Fibonacci level at $1844.00 is likely to determine the direction of August Comex gold early Monday.

Bearish Scenario

A sustained move under $1844.00 will indicate the presence of sellers. The first downside target is the 50% level at $1837.30.

A failure to hold $1837.30 could trigger a break into the short-term Fibonacci level at $1826.60. If this level is broken then look for a retest of the minor bottom at $1817.77.

Bullish Scenario

A sustained move over $1837.30 will signal the presence of buyers. This could trigger a surge into the major Fibonacci level at $1844.00.

Overtaking and sustaining a rally over $1844.00 will indicate the buying is getting stronger. However, buyers are still facing potential resistance at $1850.30, $1854.80 and $1861.50.

I don’t think we’ll see a strong breakout to the upside until buyers take out $1861.50 with conviction.