Gold Price Futures (GC) Technical Analysis – Sitting Just Under Major Breakout Price Level at $1839.00

Gold futures are trading slightly lower at the mid-session on Tuesday in a low volume move as investors awaited Wednesday’s key report on U.S. consumer inflation (CPI). The market is trading at its highest level since early September, but running into technical resistance. Meanwhile, a dip in Treasury yields is providing some support, but gains are likely being capped by a firm U.S. Dollar.

At 16:27 GMT, December Comex gold is trading $1826.10, down $1.90 or -0.10%.

In economic news, wholesale prices jumped 8.6% in October from a year ago, the hottest annual pace on record in nearly 11 years, the Labor Department said Tuesday. The October producer price index (PPI) rose 0.6% month over month, in line with the Dow Jones consensus estimate.

As for Wednesday’s CPI report, a hot reading could actually weaken gold prices because it could support the argument the Fed has to move faster to raise interest rates.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through main tops at $1836.90, $1837.50 and $1839.00 will reaffirm the uptrend and could trigger a break out to the upside. A move through $1758.50 will change the main trend to down.

The market is currently testing a long-term Fibonacci level at $1828.80. On the downside, the key support area is a pair of 50% levels at $1800.00 to $1795.00.

Daily Swing Chart Technical Forecast

The direction of the December Comex gold futures contract into the close on Tuesday is likely to be determined by trader reaction to $1828.80.

Bullish Scenario

A sustained move over $1828.80 will indicate the presence of buyers. This could trigger a quick move into three main tops at $1836.90, $1837.50 and $1839.00.

The last main top at $1839.00 will be initially treated as resistance, but if buyers can overtake it with conviction then it will become the trigger point for an acceleration to the upside.

Based on the way the market sold-off in early June, there is no true resistance until $1919.00 – $1922.00.

Bearish Scenario

A sustained move under $1828.80 will signal the presence of sellers. If this move creates enough downside momentum then look for a possible pullback into the major support zone at $1800.00 – $1795.00. Should this area fail as support then the market could become rangebound.