Gold Price Futures (GC) Technical Analysis – Sellers Could Return on Test of $1870.30 to $1894.60

Gold futures are trading firm early Tuesday, sitting at a two-week high as investors await further news on the progress toward a new U.S. stimulus package to counter the economic fallout of a surge in coronavirus cases. The price action suggests the market is pricing in the deal, which could limit its upside once the stimulus measures are announced.

At 07:13 GMT, February Comex gold futures are trading $1869.90, up $3.90 or +0.21%.

According to reports, the U.S. Congress will vote this week on a stopgap funding bill to provide more time to reach a deal on COVID-19 relief and avert a government shutdown. The new fiscal stimulus measures couldn’t come sooner with California on Monday imposing a raft of new COVID-19 restrictions, while New York weighed a ban on indoor dining as nationwide cases continue to soar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a move through $1973.30. A move through $1767.20 will reaffirm the downtrend.

The minor trend is up. It changed up on Monday when buyers took out the minor top at $1952.70. This move shifted momentum to the upside. A move through $1824.80 will change the minor trend to down.

The short-term range is $1973.30 to $1767.20. Its retracement zone at $1870.30 to $1894.60 is the primary upside target. This zone is currently being tested.

The minor range is $1904.30 to $1767.20. Its 50% level at $1835.80 is potential support.

The major long-term support zone is $1780.50 to $1705.20. This zone stopped the selling at $1767.20 last week.

Daily Swing Chart Technical Forecast

The direction of the February Comex gold market will be determined by trader reaction to $1870.30.

Bullish Scenario

A sustained move over $1870.30 will indicate the presence of buyers. If this move generates enough upside momentum then look for a rally into the Fibonacci level at $1894.60. Overtaking this level and sustaining the move will put the gold market in a strong position.

Bearish Scenario

A sustained move under $1870.30 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the 50% level at $1835.80.

Side Notes

The main trend is down so we expect sellers to show up on a test of $1870.30 to $1894.60. They are going to try to form a secondary lower top. Aggressive counter-trend buyers are going to try to drive the market through $1894.60.

This zone is controlling the near-term direction of the market.