Gold Price Futures (GC) Technical Analysis – Strong Short-Covering Rally Could Target $1258.40 then $1260.70

Gold prices are inching higher, reversing earlier weakness. We could be looking at several things including the formation of a technically bullish closing price reversal bottom, end-of-the-quarter position-squaring or just a reaction to the weaker U.S. Dollar. Appetite for risk is high so I’m pretty confident we’re not looking at safe-haven buying.

At 0600 GMT, August Comex Gold is trading $1252.80, up $1.80 or +0.14%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1274.40 will change the main trend to up. A trade through $1246.90 will signal a resumption of the downtrend.

Due to the prolonged move down in terms of price and time, this sell-off is likely to end with a dramatic reversal bottom. We’ve already seen the lower-low so a close over Thursday’s close at $1251.00 will produce the reversal bottom.

The new short-term range is $1274.40 to $1246.90. Its 50% level or pivot at $1260.70 is the first upside target.

The new main range is $1313.00 to $1246.90. If there is a closing price reversal bottom then we could see an eventual rally into its retracement zone at $1279.80 to $1287.60.

Daily Technical Forecast

Based on the early trade, the direction of the August Comex Gold futures contract today is likely to be determined by trader reaction to the former bottom at $1251.90.

A sustained move over $1251.90 will indicate the buying is getting stronger. This could drive the market into a downtrending Gann angle at $1258.40. Overtaking this angle could drive the market into the short-term pivot at $1260.70, followed by another downtrending Gann angle at $1269.00.

Since the main trend is down, sellers could come in at $1258.40, $1260.70 and $1269.00.

A sustained move under $1251.90 will signal the presence of sellers. This could lead to a retest of $1246.90. The daily chart is wide open under this level with the July 7, 2017 main bottom at $1230.70 the next major target.