Gold Price Futures (GC) Technical Analysis – Strengthens Over $1894.60, Weakens Under $1870.30

Gold futures finished slightly lower on Thursday in a lackluster session with most of the major players on the sidelines until after the first of the year. Gold traded lower despite a weaker U.S. Dollar early in the session. Demand for the dollar-denominated asset tends to dip when the U.S. Dollar appreciates.

On Thursday, February Comex gold settled at $1895.10, down $3.50 or -0.18%.

Gold gained about 25% in 2020 with most of that advance fueled by tremendous amounts of fiscal and monetary stimulus earlier in the year. The market has struggled as of late after topping out in early August. This is because the global economy is improving, dampening the need for even more stimulus from the global central banks. Additionally, the rollout of the vaccines has raised hope for a speedier recovery.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1912.00 will signal a resumption of the uptrend. The main trend will change to down on a move through the nearest swing bottom at $1820.00.

The minor trend is also up. A trade through $1912.00 will make $1859.00 a new minor bottom.

The short-term range is $1973.30 to $1767.20. Its retracement zone at $1870.30 to $1894.60 is controlling the near-term direction of the market.

The minor range is $1767.20 to $1912.00. Its retracement zone at $1839.60 to $1822.50 is additional support.

Short-Term Outlook

Based on Thursday’s close at $1895.10, the direction of the February Comex gold market at the start of the new year will likely be determined by trader reaction to the Fibonacci level at $1894.60.

Bullish Scenario

A sustained move over $1894.60 will indicate the presence of buyers. Overtaking the highs at $1904.10 and $1912.00 will indicate the buying is getting stronger. The high at $1912.00 is a potential trigger point for an acceleration to the upside since the nearest resistance is the November 9 main top at $1973.30.

Bearish Scenario

A sustained move under $1894.60 will signal the presence of sellers. This could trigger a break into the 50% level at $1870.30. Taking out this level could trigger an acceleration to the downside with the next target zone $1839.60 to $1822.50.