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James Hyerczyk
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Comex Gold

Gold futures finished lower on Friday after failing to follow-through to the upside following Thursday’s potentially bullish closing price reversal bottom. The catalyst behind today’s decline was a stronger U.S. Dollar. Bullion also posted its steepest weekly contraction since March.

On Friday, December Comex gold settled at $1866.30, down $10.60 or -0.56%

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Gold posted a closing price reversal bottom on Thursday after the dollar index rally into a two-month high lost steam as it approached a key resistance area. Nonetheless, the dollar remained on course for its biggest weekly gains since early April.

The news that the Democrats were working on a $2.4 trillion stimulus package, after U.S. Fed officials urged for more fiscal stimulus, offered some respite to investors’ hopes, but skeptical gold buyers failed to bite on the story.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum may be getting ready to shift to the upside with the formation of the closing price reversal bottom on Thursday.

A trade through $1851.00 will negate the closing price reversal top and signal a resumption of the downtrend.

A move through yesterday’s high at $1880.90 will confirm the closing price reversal bottom. The move won’t change the main trend to up, but it could trigger the start of a 2 to 3 day counter-trend rally.

The main range is $1690.10 to $2089.20. Its retracement zone at $1889.70 to $1842.60 is currently being tested. Trader reaction to this zone will determine the near-term direction of the market.

The minor range is $1983.80 to $1851.00. Its 50% level at $1917.40 is the first potential upside target.

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Daily Swing Chart Technical Forecast

Based on Thursday and Friday’s price action, the near-term direction of the December Comex gold futures contract is likely to be determined by trader reaction to $1851.10 and $1880.90.

Bearish Scenario

A sustained move under $1851.10 will negate the closing price reversal bottom and signal a resumption of the downtrend. This should lead to a test of the Fibonacci level at $1842.60. This is a potential trigger point for an acceleration into a main bottom at $1819.30.

Bullish Scenario

Taking out $1880.90 will confirm the closing price reversal top. This could lead to a quick test of the main 50% level at $1889.70. This is a potential trigger point for an acceleration to the upside with $1917.40 the next potential upside target.

For a look at all of today’s economic events, check out our economic calendar.
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