Gold Price Futures (GC) Technical Analysis – Rangebound Between a Pair of Retracement Zones

Gold futures are trading lower late in the session on Thursday after giving back earlier gains. Traders said the catalysts behind the selling pressure were the overall vaccine-driven optimism and U.S. lawmaker struggles to push through new fiscal stimulus before year-end.

At 19:37 GMT, February Comex gold futures are trading $1838.40, down $0.10 or -0.01%.

Earlier in the session, gold rallied after a report from the U.S. showed that the number of Americans filing first-time claims for unemployment benefits surged last week with the country in the throes of a fresh wave of infections and resultant lockdowns.

Also giving gold a boost was a further accommodative stance from the European Central Bank (ECB).  ECB policymakers eased policy again and kept government, corporate borrowing costs at record lows.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1767.20 will reaffirm the downtrend. The main trend will change to up on a move through $1973.30.

The minor trend is up. A trade through $1824.80 will change the minor trend to down.

The short-term range is $1973.30 to $1767.20. Its retracement zone at $1870.30 to $1894.60 is resistance. This area stopped the buying at $1879.80 on Tuesday.

The minor range is $1767.20 to $1879.80. Its retracement zone at $1823.50 to $1810.20 is the next downside target area.

The major support is the long-term retracement zone at $1780.50 to $1705.20. This zone stopped the selling at $1767.20 on November 30.

Short-Term Outlook

The near-term direction of gold is likely to be determined by trader reaction to $1823.50 to $1810.20.

Aggressive counter-trend buyers are going to come in on a test of $1823.50 to $1810.20. They are going to try to form a potentially bullish secondary higher bottom. If successful, this could launch a retest of $1870.30 to $1894.60. Overcoming the latter could trigger an acceleration to the upside.

Trend trading sellers are going to try to take out $1810.20 in an effort to make $1870.30 to $1894.60 a new secondary lower top. If successful, this could trigger a break into $1780.50 to $1767.20.