Gold Price Futures (GC) Technical Analysis – Series of Inside Moves Suggest Investor Indecision, Impending Volatility

Gold futures are trading flat early Friday after closing lower the previous session. Once again, the market tried to rally but the buying dried up as it approached nearby resistance at $1228.60. Gold is currently trading inside its August 3 range at $1212.50 to $1228.50 for a fifth straight session. This screams of breakout, but traders are looking for a catalyst to trigger a short-covering rally or another new low for the year.

At 0420 GMT, December Comex gold is trading $1219.90, unchanged.

Traders continue to monitor the direction of the U.S. Dollar. The hedge funds have bet heavily on the long side of the dollar. And why not, higher interest rates and strong economic data are very supportive of the greenback at this time. Additionally, hedge funds and money managers are net short gold for the first time since 2016. This means they are looking for lower prices.

The charts indicate there is nothing but air under $1212.50 with $1162.00 the next major target.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, the closing price reversal bottom from August 3 has temporarily halted the selling. A trade through $1212.50 will negate the chart pattern and signal a resumption of the downtrend. The main trend will change to up on a move through $1244.70.

The minor trend is also down. A move through $1237.80 will change the minor trend to up and shift momentum to the upside.

The main range is $1244.70 to $1212.50. Its retracement zone at $1228.60 to $1232.40 is resistance. Overtaking this zone will also shift momentum to the upside.

Daily Swing Chart Technical Forecast

Given the fifth straight session inside the August 3 range, the direction of the December Comex gold market today is likely to be determined by trader reaction to $1212.50 and $1228.50. You can even treat the mid-point of this range at $1220.50 as a pivot.

Additionally, if you take a longer-term point of view, $1228.60 to $1232.40 is an even more important pivot zone.

The bottom-line is without a meaningful bullish catalyst, gold has about $50 to the downside if $1212.50 is taken out with increasing selling volume.

At the same time, any rally over $1232.40 is likely to be labored because of potential resistance at $1237.80, $1244.60 and $1244.70.