Gold Price Futures (GC) Technical Analysis – Retracement Levels Making It Hard to Generate Momentum

Based on the early price action and the current price at $1571.60, the direction of the April Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the 50% level at $1570.60.
James Hyerczyk

Gold futures are trading lower early Tuesday after yesterday’ rally drove the market to its highest level in a week. The precious metal is trading weaker despite doubts about how quickly China’s factories could get back to work given that the coronavirus continues to spread and deaths mount.

On Monday, gold hit its high for the session after the World Health Organization (WHO) warned the spread of coronavirus among people who had not been to China could be “the spark that becomes a bigger fire”.

At 03:38 GMT, April Comex gold is trading $1571.16, down $7.90 or -0.50%.

In China, factories were slow in re-opening after an extended Lunar New Year break, leading analysts at JPMorgan to again downgrade forecasts for growth this quarter.

“The coronavirus outbreak completely changed the dynamics of the Chinese economy,” they said in a note.

On paper, the news appears positive for gold prices, however, gains will be limited as long as the U.S. Dollar remains firm, Treasury yields steady and demand for risk strong. Furthermore, traders may be anticipating a somewhat hawkish tone from Federal Reserve Chairman Jerome Powell on Tuesday and Wednesday, since he’s not likely to find any reason to alter the central bank’s current “wait and see” policy.

Daily April Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1598.50 will change the main trend to up. A move through $1551.10 will signal a resumption of the downtrend.

The minor trend is also down. The new minor top is $1580.50. A trade through this level will shift momentum to the upside.

Due to a number of short-term price swings, prices are also being controlled by a number of retracement levels. This is helping to produce a choppy trade.

On the downside, minor retracement levels come in at $1570.60 and $1565.80. On the upside, the retracement zone at $1581.20 to $1590.30 is resistance.

The major price range is $1458.50 to $1619.60. Its retracement zone at $1539.10 to $1520.00 is a key support zone and value area. Strong buyers could come in on a test of this area.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $1571.60, the direction of the April Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the 50% level at $1570.60.

Bullish Scenario

A sustained move over $1570.60 will indicate the presence of buyers. The first upside targets are a minor top at $1580.50 and a 50% level at $1581.20.

Taking out $1581.20 could trigger an acceleration into the Fibonacci level at $1590.30. This is a potential trigger point for an acceleration into the main top at $1598.50.

Bearish Scenario

A sustained move under $1570.60 will signal the presence of sellers. The first downside target is a 50% level at $1565.80. This is a potential trigger point for an acceleration into the $1551.10 main bottom.

If $1551.10 fails as support then look for the selling to possibly extend into the main bottom at $1542.80 and the major 50% level at $1539.10.

Side Notes

If you’re looking for value then wait for a pullback into $1539.10 to $1520.00.

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