Based on the early price action, the direction of the December Comex gold market into the close will be determined by trader reaction to $1774.30.
Gold futures are trading at their lowest level since June 30 on Friday after a robust U.S. jobs report boosted expectations the Federal Reserve could begin tapering its economic support sooner than previously anticipated.
At 16:41 GMT, December Comex gold is trading $1759.90, down $49.00 or -2.71%.
Earlier today, the U.S. government reported that Non-Farm Payrolls exceeded expectations with a 943,000 addition in jobs last month and the unemployment rate dropped to 5.4%, according to the Bureau of Labor Statistics. Average hourly earnings also increased more than expected, rising 0.4% for the month.
The main trend is down according to the daily swing chart. The trend turned down earlier in the session when sellers took out a pair of main bottoms at $1795.60 and $1793.10. A trade through the pair of main tops at $1837.50 and $1839.00 will change the main trend to up.
The main range is $1683.00 to $1922.00. The market is currently trading on the weak side of its retracement zone at $1774.30 to $1802.50, making this area resistance.
Additional resistance is the long-term 50% level at $1795.00. The major support is the long-term Fibonacci level at $1716.00.
Based on the early price action, the direction of the December Comex gold market into the close will be determined by trader reaction to $1774.30.
A sustained move under $1774.30 will indicate the selling pressure is getting stronger. This could trigger a move into the next main bottom at $1754.50. Taking out this level will reaffirm the downtrend and could trigger a further break into the major Fibonacci level at $1716.00.
A sustained move over $1774.30 will signal the presence of buyers. This could trigger a late session short-covering rally with potential targets a pair of 50% levels at $1795.00 and $1802.50.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.