Gold Price Futures (GC) Technical Analysis – Struggling to Overcome $1798.50 – $1822.60 Retracement Zone
Gold futures are trading lower shortly after the mid-session on Friday as a surprisingly strong U.S. labor market report eased recession worries and torpedoed speculation that the Federal Reserve would pivot away from its aggressive monetary policy tightening.
The government’s job data showed Non-Farm Payrolls increased 528,000 last month and surpassed Dow Jones’ expectations of 258,000. At the same time, wage growth rose with average earnings climbing 0.5% for the month and 5.2% over last year. The unemployment rate fell to a pre-pandemic low of 3.5%. The stronger than anticipated report showed that the U.S. is likely not in a recession.
For a little over a week, gold traders were pricing in a shift by the Fed from hawkish to somewhat dovish on the notion that the U.S. economy was weakening. Today’s report shows the economy is strong enough to handle another 75 basis point rate hike by the Fed at its next meeting on September 21.
This may be enough to cap gold prices, at least temporarily, but some traders may be waiting for confirmation from Wednesday’s U.S. consumer inflation report.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1812.00 will signal a resumption of the uptrend. A move through $1727.00 will change the main trend to down.
The minor trend is also up. A trade through $1770.00 will change the minor trend to down. This will shift momentum to the downside.
The intermediate range is $1900.80 to $1696.10. Its retracement zone at $1798.50 to $1822.60 is resistance. It stopped the rally on Thursday at $1812.00.
The first minor range is $1770.00 to $1812.00. Its pivot at $1791.00 is the first downside target.
The second minor range is $1727.00 to $1812.00. Its pivot at $1769.50 is the next downside target. A third pivot price target comes in at $1754.10.
The direction of the December Comex gold futures contract into the close on Friday is likely to be determined by trader reaction to a pair of 50% levels at $1798.50 and $1791.00.
Look for the upside bias to continue on a sustained move over $1798.50, and for a downside bias to develop on a sustained move under $1791.00.