The direction of the December Comex gold futures contract early Wednesday is likely to be determined by trader reaction to the pivot at $1757.40.
Gold futures are trading better late in the session on Tuesday, but off its highs. Today’s intraday spike was driven by rising inflation fears, which dampened demand for riskier assets. A firm U.S. Dollar helped cap gains, but lower Treasury yields provided some support.
At 19:03 GMT, December Comex gold is trading $1759.80, up $4.10 or +0.23%.
A global energy crunch has threatened economic outlook and fanned inflation fears, driving some investors toward safer assets.
The focus now shifts to the minutes from the Fed’s September 21-22 policy meeting and the consumer price index, both due on Wednesday.
The main trend is up according to the daily swing chart, but momentum is trending lower. A trade through $1782.40 will signal a resumption of the uptrend. A move through $1745.40 will change the main trend to down.
The minor trend is also up. A trade through $1792.90 will change the minor trend to down. This will confirm the shift in momentum.
On the downside, support is $1757.40, $1751.80 and $1738.60.
On the upside, resistance is $1765.90, followed by $1779.00. The latter is a potential trigger point for a move into $1795.00 and $1800.00.
The direction of the December Comex gold futures contract early Wednesday is likely to be determined by trader reaction to the pivot at $1757.40.
A sustained move over $1757.40 will indicate the presence of buyers. The first upside target is $1765.90. This is a potential trigger point for an acceleration into $1779.00 to $1782.40.
A sustained more under $1757.40 will signal the presence of sellers. This could lead to a labored break with potential support targets at $1751.80, $1792.90 and $1745.40.
This type of chart pattern typically leads to a strong breakout in either direction. However, the danger in taking the trade is the possibility of low volume.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.