Gold Price Futures (GC) Technical Analysis – Set-Up for $40 Break Under $1527.00

Gold futures are under pressure again on Friday, falling victim to higher yields and a stronger U.S. Dollar Index. A steep drop in the Euro is primarily responsible for the spike higher in the dollar index. The single-currency plunged to its lowest level since the week-ending May 19, 2017 as investors looked for aggressive easing by the European Central Bank and ignored doubts by some policymakers about the need for more stimulus. A stronger dollar tends to reduce demand for dollar-denominated gold.

At 17:14 GMT, December Comex gold futures are trading $1531.70, down $5.20 or -0.35%.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has shifted to the downside with the formation of the closing price reversal top at $1565.00 on August 26 and the subsequent confirmation of the potentially bearish chart pattern on August 29.

A trade through $1565.00 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will actually change to down on a trade through $1412.10, but there is room for a normal 50% to 61.8% retracement over the near-term.

The minor trend is also up. A trade through $1488.90 will change the minor trend to down. This will also confirm the shift in momentum.

The minor range is $1488.90 to $1565.00. Its 50% level or pivot at $1527.00 continues to act like support, but if it fails, the market could plunge about $40.00.

The main range is $1412.10 to $1565.00. Its retracement zone at $1488.50 to $1470.50 is the first major target zone. It’s also a value area so buyers could step in on the first test of this zone.

Daily Technical Forecast

Based on the early price action and the current price at $1531.70, the direction of the December Comex gold futures contract into the close is likely to be determined by trader reaction to the minor 50% level at $1527.00.

Bullish Scenario

A sustained move over $1527.00 will mean there are still buyers in there, trying to defend the uptrend. Potential upside targets include this week’s high at $1565.00, and a pair of uptrending Gann angles at $1568.40 and $1580.10.

Bearish Scenario

A sustained move under $1527.00 will signal the presence of sellers. This could trigger a steep break into an uptrending Gann angle at $1496.10, followed by a minor bottom at $1488.90 and a short-term 50% level at $1488.50.

Additional downside targets are an uptrending Gann angle at $1482.40 and the short-term Fibonacci level at $1470.50.