Gold Price Futures (GC) Technical Analysis – Strengthens Over $1790.80, Weakens Under $1781.00

Gold futures jumped on Friday as a dip in U.S. Treasury yields boosted the precious metal’s appeal. A flat U.S. Dollar Index likely limited gold’s range. Despite uncertainty over the impact of the Omicron coronavirus variant, gold has showed little reaction to the news. Instead trader have been more reactive to hawkish comments from Federal Reserve Chair Jerome Powell earlier in the week.

On Friday, February Comex gold futures settled at $1783.90, up $21.20 or +1.20%. The SPDR Gold Shares (GLD) ETF finished at $166.63, up $1.39 or +0.84%.

The U.S. 10-year bond yield dropped below 1.4% for the first time since September, reducing the opportunity cost of holding non-interest bearing gold.

The catalyst behind the drop in yields was a mixed U.S. jobs report. Data on Friday showed U.S. employment growth slowed considerably in November, but the unemployment rate plunged to a 21-month low of 4.2%, suggesting the labor market was rapidly tightening.

The Fed’s Powell told Congress policymakers look likely to accelerate the wind down of their bond-buying program when they meet on December 14-15.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on November 16.

A trade through $1761.00 will change the main trend to down. A move through $1881.90 will signal a resumption of the uptrend. This is highly unlikely, but due to the prolonged move down in terms of price and time, traders should watch for a closing price reversal bottom.

The minor trend is down. A trade through $1819.30 will change the minor trend to up. This will shift momentum to the upside. The new minor bottom is $1762.20.

The main support is a long-term retracement zone at $1781.00 to $1757.10. The market found support inside this zone on Thursday at $1762.20.

The minor range is $1819.30 to $1762.20. Its 50% level at $1790.80 is the first upside target.

The second minor range is $1881.90 to $1762.20. If the minor trend changes to up then its 50% level at $1822.10 will become the next upside target.

Short-Term Outlook

The direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to $1781.00.

Bullish Scenario

A sustained move over $1781.00 will indicate the presence of buyers. This could lead to a quick test of $1790.80.

If $1790.80 is taken out by strong buying volume then look for a potential acceleration to the upside with the next major target zone $1819.30 – $1822.10.

Bearish Scenario

A sustained move under $1781.00 will signal the presence of sellers. This could trigger a break into a support cluster at $1762.20, $1761.00 and $1757.10.

The Fibonacci level at $1757.10 is a potential trigger point for an acceleration to the downside with the next major target the main bottom at $1723.70.