Gold Price Futures (GC) Technical Analysis – Reaction to $1865.20 Sets the Tone Amid Rate Hike Uncertainty

Gold futures are trading slightly lower on Thursday, hovering just below a five-month high reached earlier in the week. After posting a dramatic closing price reversal top on Tuesday, sellers failed to follow-through to the downside in yesterday’s session, leading to a fast recovery of the previous day’s losses.

At 09:24 GMT, December Comex gold futures are trading $1867.00, down $3.20 or -0.17%.

Uncertainty over the pace at which central banks could raise interest rates to curb growing inflation is helping to generate a volatile two-sided trade. Helping to cap gains are concerns over the pace at which the Fed will taper its current bond purchases and the timing and frequency of its first post-pandemic rate hike and subsequent rate hikes to follow.

Gold could become rangebound until the next Fed meeting in mid-December, but there is also the chance of short-term volatility after President Joe Biden announces his Fed chair appointment shortly before next week’s U.S. Thanksgiving holiday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum may be getting ready to shift to the downside following Tuesday’s closing price reversal top.

A trade through $1879.50 will negate the potentially bearish chart pattern and signal a resumption of the uptrend. A move through $1851.00 will confirm the reversal top. This will shift momentum to the downside and could trigger the start of a 2 to 3 day correction.

On the downside, the first target is the former top at $1839.00. This is followed by a long-term Fibonacci level at $1828.80 and a minor 50% level at $1819.00.

On the upside, the two key targets are main tops at $1919.10 and $1922.00.

Daily Swing Chart Technical Forecast

The direction of the December Comex gold futures contract on Thursday is likely to be determined by trader reaction to $1865.20.

Bullish Scenario

A sustained move over $1865.30 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $1879.50. Taking out this level with strong buying volume could trigger an acceleration into $1919.10 to $1922.00.

Bearish Scenario

A sustained move under $1865.20 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into $1851.00.

Taking out $1851.00 will confirm the closing price reversal top. This will shift momentum to the downside and could trigger a minimum 2 to 3 day correction into a series of levels at $1839.00, $1828.80 and $1819.00.