Gold Price Futures (GC) Technical Analysis – Short-Covering Over $1757.40, More Selling Under $1738.60

Gold futures are trading lower late in the session on Friday, but holding the previous session’s low. On Thursday the market fell nearly 3% to its lowest level since August 12 after an unexpected increase in U.S. retail sales raised expectations that the Fed may reduce its stimulus sooner, which also drove Treasury yields higher and a rally in the U.S. Dollar.

At 20:21 GMT, December Comex gold futures are trading $1752.70, down $4.00 or -0.23%.

The yield on the 10-year U.S. Treasury note hit its highest level since July 14. Any rise in yields tends to translate to a higher opportunity cost of holding non-yielding assets like bullion. Additionally, a rising U.S. Dollar will increase gold’s cost for buyers holding other currencies.

The Fed’s policy-setting committee will meet next Tuesday and Wednesday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1745.50 will signal a resumption of the downtrend. A move through $1810.60 will change the main trend to up.

The short-term range is $1677.90 to $1836.90. The market is currently testing its retracement zone at $1757.40 to $1738.60. Trader reaction to this zone is likely to determine the near-term direction of the market. Additional support is the long-term Fibonacci level at $1716.00.

The minor range is $1810.60 to $1745.50. Its 50% level at $1778.10 is the nearest upside target. This is followed by major resistance at $1795.00 to $1800.00.

Short-Term Outlook

The short-term direction of the December Comex gold market is likely to be determined by trader reaction to the retracement zone at $1757.40 to $1738.60.

Bullish Scenario

A sustained move over the 50% level at $1757.40 will indicate the presence of aggressive counter-trend buyers. This could trigger a rally into the pivot at $1778.10. Since the main trend is down, sellers are likely to come in on a test of this level. Taking it out will indicate the buying is getting stronger with $1795.00 to $1800.00 the next likely upside target area.

Bearish Scenario

A sustained move under the Fibonacci level at $1738.60 will signal the presence of sellers. This could trigger a further break into the long-term Fibonacci level at $1716.00, followed by the August 9 main bottom at $1677.90.

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