Gold Price Futures (GC) Technical Analysis – Strengthens Over $1803.30, Weakens Under $1799.00

Gold futures are trading lower early Wednesday as investors continue to monitor the movement in U.S. Treasury yields and the U.S. Dollar, while dealing with well-below average holiday volume. Gold hit a one-month high the previous session on signs of rising inflation, but gave back most of those gains as the greenback firmed.

At 06:48 GMT, February Comex gold is trading $1806.40, down $4.50 or -0.25%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $168.66, down $0.71 or -0.42%.

On Tuesday, gold hit its highest level since November 18 on concerns over rising inflation. However, prices retreated later in the session as the U.S. Dollar firmed. The rise in the greenback was fueled by speculation the U.S. Federal Reserve could raise interest rates as early as March to counter the move in inflation.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1821.60 will signal a resumption of the uptrend. A move through $1785.00 will change the main trend to down.

The main range is $1881.90 to $1753.00. Its retracement zone at $1817.50 to $1832.70 stopped the rally on Tuesday at $1821.60.

The minor range is $1785.00 to $1821.60. Its retracement zone at $1803.30 – $1799.00 is the first downside target and potential support.

The short-term range is $1753.00 to $1821.60. Its 50% level at $1787.30 is a value level.

The major support is a long-term retracement zone at $1781.00 to $1757.10.

Daily Swing Chart Technical Forecast

The direction of the February Comex gold futures contract on Wednesday is likely to be determined by trader reaction to $1803.30.

Bullish Scenario

A sustained move over $1803.30 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the main 50% level at $1817.50, followed by the minor top at $1821.60. This price is a potential trigger point for an acceleration into the main Fibonacci level at $1832.70.

Bearish Scenario

A sustained move under $1803.30 will signal the presence of sellers. The first target is a minor Fibonacci level at $1799.00.

Buyers could come in on the first test of $1799.00, but if it fails then look for the selling to possibly extend into the short-term 50% level at $1787.30, followed by the main bottom at $1785.00 and the major 50% level at $1781.00.