Gold Price Futures (GC) Technical Analysis – Rangebound as Investors Weight Coronavirus-Induced Options

Gold futures are trading lower in the overnight session on Tuesday as tensions eased somewhat between the United States and China as to who’s to blame for the start of the coronavirus pandemic.

Moves by some countries to relax virus restrictions also dampened the precious metal’s investment appeal. A stronger U.S. Dollar is also weighing on demand for the dollar-denominated asset as well as renewed interest in higher-yielding assets like stocks.

At 09:54 GMT, June Comex gold is trading $1704.90, down $8.40 or -0.49%.

The recent slow, grinding, sideways to lower price action reflects investors weighing fears of a second wave of coronavirus cases against efforts to reopen businesses and loosen restrictions.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It turned down last week when sellers took out the main bottom at $1704.10 although some bearish traders are probably waiting for the swing bottom at $1666.20 to fail before considering an actual change in trend has taken place.

The short-term range is $1788.80 to $1666.20. Its 50% level at $1727.50 is new resistance.

The intermediate range is $1576.00 to $1788.80. Its retracement zone at $1682.40 to $1657.30 is providing support. This zone stopped recent selling at $1666.20 and $1676.00.

The main range is $1453.00 to $1788.80. Its retracement zone at $1620.90 to $1581.30 is a major support area.

Daily Swing Chart Technical Forecast

The market is currently trading inside a pair of 50% levels at $1727.50 and $1682.40, suggesting investor indecision. Like I wrote earlier, investors are weighing the possibility of a second-wave of coronavirus cases against an improvement in the economy.

If conditions continue to improve and as more regions open up their economies, we’re likely to see gold drift toward $1682.40 to $1657.30. Taking out $1657.30 will show that investors are increasing their confidence and that the worst may be over.

A resurgence above $1727.50 will be the first sign that doubt over a sustainable recovery is creeping back into the market.

As long as investors continue to adopt a “wait and see” approach, traders are going to have to be content with a rangebound trade.