Gold Price Futures (GC) Technical Analysis – Rangebound; Could Strengthen Over $1787.90, Weaken Under $1780.50

Gold futures are trading flat early Monday with gains capped by a stronger U.S. Dollar. Meanwhile, U.S. Treasury yields are also flat as investors cautiously awaited key decisions from the Federal Reserve on tapering and interest rates after data showed another uptick in inflation.

On Monday, December Comex gold futures are trading $1785.70, up $1.80 or +0.10%.

Today’s early price action follows Friday’s steep sell-off that was fueled by another rise in inflation with the personal consumption price index (PCE) advancing last month. Weak longs dumped their gold positions on this news because they felt it may push the Fed to an earlier than expected rate hike.

A 4.4% surge in the government’s index of core personal consumption expenditures – the Fed’s preferred inflation measure – solidified market expectations for a rate hike around the middle of 2022.

Following the release of the data, futures on the Fed Funds rate, which track short-term rate expectations, priced in a 90% chance of quarter-point tightening by June 2022, factoring in another rate increase by December.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $1815.50 will reaffirm the uptrend, while a move through $1760.30 changes the main trend to down.

The minor trend is down. It turned lower on Friday, shifting momentum to the downside.

Gold is currently trading inside a series of retracement levels that could influence the short-term direction of the market.

On the upside, potential resistance is layered at $1787.90, $1795.00 and $1800.00. The latter is a potential trigger point for an acceleration to the upside.

On the downside, the first support is $1780.50, followed by $1768.30 and $1757.40. The latter is a potential trigger point for an acceleration into $1738.60.

The current retracement configuration suggests the way of least resistance is down.

Daily Swing Chart Technical Forecast

The direction of the December Comex gold market on Monday is likely to be determined by trader reaction to $1780.50.

Bullish Scenario

A sustained move over $1780.50 will indicate the presence of buyers. The first upside target is $1787.90. Overcoming this level could fuel a retest of 50% levels at $1795.00 and $1800.00.

Bearish Scenario

A sustained move under $1780.50 could lead to a test of Friday’s low at $1772.40, followed by the 50% level at $1768.30. This is the last potential support before the $1760.30 main bottom.