Gold Price Futures (GC) Technical Analysis – Strengthens Over $1537.40, Weakens Under $1528.50

Gold futures hit their highest level in over two weeks on Monday, driven by weak economic data from the Euro Zone that suggests the European Central Bank may have to cut interest rates again in December. Escalating tensions in the Middle East as well as concerns over U.S.-China trade relations continue to underpin the market.

At 16:25 GMT, December Comex gold is trading $1529.30, up $14.20 or +0.94%.

The initial spike in gold futures on Monday was triggered by a report that showed German private sector activity shrank for the first time in 6-1/2 years in September as manufacturing recession deepened unexpectedly and growth in the service sector lost momentum, while Euro Zone business growth stalled, a survey showed on Monday.

Gains were capped, however, after the U.S. reported better-than-expected manufacturing PMI data.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. The main trend will change to up on a trade through $1566.20. A move through $1490.70 will signal a resumption of the downtrend.

The minor trend is up. This confirms the shift in momentum to up. It was reaffirmed earlier today when buyers took out the last minor top at $1532.20.

Retracement zone support comes in at $1489.20 and $1481.30.

The short-term range is $1566.20 to $1490.70. Its retracement zone at $1528.50 to $1537.40 is the first upside target. Today’s rally stalled inside this zone at $1534.40. Since the main trend is down, sellers may come in on a test of this zone in an attempt to form a secondary lower top.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the December Comex gold futures contract the rest of the session is likely to be determined by trader reaction to the short-term 50% level at $1528.50.

Bearish Scenario

A sustained move under $1528.50 will indicate the presence of sellers. If this creates enough downside momentum then look for a potential break into $1512.50, followed by the main bottom at $1490.70.

Bullish Scenario

A sustained move over $1528.50 will signal the presence of buyers. The next target is the short-term Fibonacci level at $1537.40. This is a potential trigger point for an acceleration to the upside.