James Hyerczyk
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Gold futures are edging lower on Monday after an early session attempt to take out Friday’s high was met with selling pressure. Treasury yields are dipping lower early in the session, but the U.S. Dollar is trading higher against a basket of currencies, suggesting we could be seeing early signs of a risk off trading session.

At 01:30 GMT, June Comex gold futures are trading $1776.60, down $3.60 or -0.20%.

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Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1784.70 will signal a resumption of the uptrend. The main trend will change to down on a move through $1723.20.

On the upside, the major resistance is the long-term 50% level at $1788.50.

On the downside, the support is a series of 50% levels at $1767.60, $1754.00, $1746.90 and $1731.00. The major support is the long-term 61.8% level at $1711.90.


Daily Swing Chart Technical Forecast

The direction of the June Comex gold futures contract on Monday is likely to be determined by trader reaction to the long-term 50% level at $1788.50.

Bearish Scenario

A sustained move under $1788.50 will indicate the presence of sellers. The first downside target is the 50% level at $1767.60. Since the main trend is up, buyers are likely to come in on the first test of $1767.50. If it fails then look for the selling to possibly extend into a minor 50% level at $1754.00. Once again, buyers could step in to stop the price slide.

Bullish Scenario

A sustained move over $1788.50 will signal the presence of buyers. This move could trigger an acceleration to the upside with $1817.60 the next likely upside target price.

Side Notes

For bigger picture traders, the retracement zone at $1788.50 to $1711.90 represents 50% to 61.8%, respectively, of last year’s trading range. So overtaking $1788.50 could become a big deal if the buying volume increases on the move. Fundamentally, it’s going to need help from lower yields and a weaker U.S. Dollar. I don’t think gold will be able to sustain a rally over $1788.50 without help from those two factors.

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