Gold Price Futures (GC) Technical Analysis – Softening Inflation Outlook, Impending Rate Hikes Limiting Gains

Gold futures are inching higher early Tuesday as the buying remained tentative due to a softening inflation outlook and impending interest rate hikes. Nonetheless, prices are hovering near six-month lows, which could make them attractive to aggressive counter-trend buyers.

At 04:42 GMT, August Comex gold futures are trading $1811.90, up $3.60 or +0.20%. Last Friday, the SPDR Gold Shares ETF (GLD) settled at $168.28, down $0.18 or -0.11%.

Gains are also being capped by a rise in the benchmark U.S. 10-year Treasury yield and a steady U.S. Dollar. Higher rates make non-yielding gold a less-desirable investment, while a stronger greenback tends to weigh on foreign demand for dollar-denominated gold.

Gold traders will be eyeing Wednesday’s Fed minutes and Friday’s U.S. Non-Farm Payrolls report this week. Government data on employment will give investors a small look at the strength of the labor market after 150 basis points of rate increases already delivered by the Fed. A weaker-than-expected jobs report could increase concerns of a potential recession.

Short-Term Outlook

Trader reaction to the minor 50% level at $1809.20 is likely to determine the direction of the August Comex gold futures market early Tuesday.

Bearish Scenario

A sustained move under $1809.20 will indicate the presence of sellers. The first downside target is a minor pivot at $1799.30. If this price level fails as support then look for the selling pressure to possibly extend into the minor bottom at $1783.40.

A trade through $1783.40 will reaffirm the downtrend. This could trigger an acceleration into the January 7, 2022 main bottom at $1764.10.

Bullish Scenario

A sustained move over $1809.20 will signal the presence of buyers. The first target is the minor 61.8% level at $1815.20.

Since the main trend is down, sellers could come in on the first test of $1815.20. However, overcoming this level will indicate the short-covering rally is getting stronger. This could trigger an acceleration to the upside with a resistance cluster at $1833.00 – $1834.90 the next upside target area.