Gold Price Futures (GC) Technical Analysis – Surge into $1870.30 – $1894.60 Should Attract New Short-Sellers

Gold futures continue to grind higher on Thursday, driven by short-covering as traders reacted to a weakening U.S. Dollar, which fell to a 2-1/2 year lower earlier in the session. The catalyst pushing the greenback lower and chasing the weak short-sellers out of the gold market is optimism over an eventual breakthrough in negotiations over a fresh U.S. coronavirus aid package.

At 11:05 GMT, February Comex gold futures are trading $1841.60, up $11.40 or +0.62%.

Traders are saying that hopes of a stimulus deal and optimism over vaccine progress is helping to drive the U.S. Dollar to its lowest level since April 2018, making dollar-denominated gold more attractive to foreign buyers.

With the possibility of fiscal and monetary stimulus grabbing the headlines this week, weak gold short-sellers are taking profits after last week’s steep plunge.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1767.20 will signal a resumption of the downtrend. The main trend will change to up on a move through the nearest swing top at $1973.30.

The minor trend is also down. The minor trend will change to up on a move through the nearest minor top at $1904.30. This will also shift momentum to the upside.

The major support is a retracement zone at $1780.50 to $1705.20. This zone stopped the selling on November 30 at $1767.20.

The minor range is $1904.30 to $1767.20. The market is currently straddling its 50% level or pivot at $1835.80.

The short-term range is $1973.30 to $1767.20. Its retracement zone at $1870.30 to $1894.60 is the primary upside target. Since the main trend is down, short-sellers are likely to return on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the February Comex gold market on Thursday is likely to be determined by trader reaction to the minor pivot at $1835.80.

Bullish Scenario

A sustained move over $1835.80 will indicate the short-covering is getting stronger. If this move creates enough upside momentum then look for the rally to possibly extend into the short-term 50% level at $1870.30, followed by the short-term Fibonacci level at $1894.60.

Bearish Scenario

A sustained move under $1835.80 will signal the presence of sellers. This could trigger an initial break into $1807.00. Aggressive counter-trend buyers could come in on the first test of this level. They will be trying to form a secondary higher bottom.

If $1807.00 fails as support then look for the selling to possibly extend into $1780.to then $1767.20.