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James Hyerczyk

Gold futures finished lower on Monday after plunging early in the session then steadying the rest of the day. Fears of a new coronavirus strain roiled market, sending investors into the safety of the U.S. Dollar, while dampening demand for dollar-denominated gold. Gold did find some support from a U.S. stimulus deal.

On Monday, February Comex gold settled at $1882.30, down $6.60 or -0.35%.

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Bullion jumped more than 1% earlier in the session, helped by reports that U.S. congressional leaders reached agreement on a $900 billion package. But it later fell as much as 1.3% as the dollar index rebounded off multi-year lows to a more than one-week high as fears of a highly infectious new coronavirus strain dragged the British Pound and Euro down.

News of the strain also dented risk sentiment, leading to a slump in European equities and U.S. stocks opening lower.

Daily February 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 with the formation of a potentially bearish closing price reversal top.

A trade through $1912.00 will negate the closing price and signal a resumption of the uptrend. The main trend will change to down on a move through $1820.00.

The main range is $1973.30 to $1767.20. The market straddled its retracement zone at $1870.30 and $1894.60 all session. The next major move will probably be determined by trader reaction to this area.

The minor range is $1820.00 to $1912.00. Its retracement zone is $1866.00 to $1855.10. This zone stopped the selling at $1859.00.

The short-term range is $1767.20 to $1912.00. Its retracement zone at $1839.60 to $1822.50 is a support area.


Daily Swing Chart Technical Forecast

The direction of the February Comex gold market on Tuesday is likely to be determined by trader reaction to $1870.30 and $1894.60.

Bullish Scenario

A sustained move over $1894.60 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible acceleration to the upside on a move through $1912.00.

Bearish Scenario

A sustained move under $1870.30 could lead to a labored break due to the series of retracement levels at $1855.10, $1839.60 and $1822.50.

For a look at all of today’s economic events, check out our economic calendar.
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