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James Hyerczyk
Gold Bars

Gold futures closed lower on Friday, and for a third session, traded inside the extremely wide, $57.20 range on August 13. Usually, this chart pattern suggests investor indecision and impending volatility. In this case, however, it could be a sign that momentum is getting ready to transition from upward to downward.

On Friday, December Comex gold settled at $1523.60, down $7.60 or -0.50%.

Helping to underpin gold prices are worries over global economic weakness and uncertainty over U.S.-China trade relations. Helping to cap gains were firm U.S. Treasury yields, increased demand for higher risk assets and a stronger U.S. Dollar.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside based on the potentially bearish closing price reversal top formed at $1546.10 on August 13.

A trade through $1546.10 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $1488.90 will confirm the closing price reversal top and signal a shift in momentum to the downside. The main trend will actually change to down on a trade through $1412.10.

The minor range is $1546.10 to $1488.90. Its 50% level or pivot at $1517.50 has been controlling the direction of the gold market the last three sessions without much progress in either direction.

The short-term range is $1412.10 to $1546.10. Its retracement zone is $1479.10 to $1463.30.

The intermediate range is $1396.40 to $1546.10. Its retracement zone is $1471.30 to $1453.60.


Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $1523.60, the direction of the December Comex gold futures market on Monday is likely to be determined by trader reaction to the 50% level at $1517.50.

Bullish Scenario

A sustained move over $1517.50 will indicate the presence of buyers. Overcoming the former top at $1532.40 will indicate the buying is getting stronger. (Last week’s surge was fueled by buy stops). If the upside momentum continues to build then look for the rally to possibly extend into the closing price reversal top at $1546.10. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $1517.50 will signal the presence of sellers. The daily chart is wide open to the downside under this level so look for a potential acceleration to the downside with the next target last week’s low at $1488.90.

Taking out $1488.90 will confirm the shift in momentum to the downside. This could lead to further weakness into a series of retracement levels at $1479.10, $1471.30 and $1463.30.

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