Gold Price Futures (GC) Technical Analysis – Strengthens Over $1315.60, Weakens Under $1300.60

Dovish Fed minutes, a drop in U.S. Treasury yields and renewed geopolitical concerns helped drive gold futures higher last week. Gains were likely limited by a weaker Euro which helped drive up the U.S. Dollar Index.

August Comex Gold settled at $1309.00, up $12.10 or +0.93%.

The price action suggests short-covering and some flight to safety buying was behind the rally. There was no indication that the trend was changing to up.

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. However, momentum may have shifted to the upside with the formation of the closing price reversal bottom.

A trade through $1312.60 will confirm the closing price reversal bottom. This could trigger the start of a 2 to 3 week counter-trend rally.

A move through $1286.80 will negate the closing price reversal bottom. This will also signal a resumption of the downtrend.

The main range is $1251.90 to $1379.30. Its retracement zone is $1315.60 to $1300.60. This zone is controlling the longer-term direction of the market. Last week, gold closed inside this zone.

The short-term range is $1375.10 to $1286.80. If the counter-trend rally gains traction then we could see a test of its retracement zone at $1331.00 to $1341.40. Since the main trend is down, sellers are likely to come in on a test of this area.

Weekly Swing Chart Technical Forecast

Based on last week’s close at $1309.00 and the closing price reversal bottom, the direction of the gold market this week is likely to be determined by trader reaction to last week’s high at $1312.60.

Taking out $1312.60 will confirm the chart pattern. This could trigger the start of a 2 to 3 week counter-trend rally. The first upside target is the 50% level at $1315.60. This level is a potential trigger point for an acceleration to the upside with $1331.00 to $1341.40 the next likely upside target.

The inability to overcome and sustain a rally over $1312.60 will signal the presence of sellers. This could trigger a pullback into the main Fibonacci level at $1300.60. If this price fails then look for a retest of $1286.80.

Taking out $1286.80 could trigger another acceleration to the downside with $1251.90 the next major downside target.