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James Hyerczyk
Comex Gold

Gold futures rebounded from early session weakness to post a potentially bullish closing price reversal bottom last week. Despite the strong U.S. Dollar, which hit a 2-year high last week, gold prices rallied because of a drop in U.S. Treasury yields. They were part of global weakness in the government debt markets that started after the release of weaker-than-expected German economic data.

Last week, June Comex gold settled at $1288.80, up $1280.80 or +1.00%.

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Weekly June Comex Gold

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. However, last week’s closing price reversal bottom indicates momentum may be getting ready to shift to the upside. A trade through $1290.90 will confirm the chart pattern. This could trigger the start of a 2 to 3 week counter-trend rally. A move through $1267.90 will negate the chart pattern and signal a resumption of the downtrend.

The main trend will change to up on a trade through $1330.80. This is followed by another main top at $1356.00.

The main range is $1189.30 to $1356.00. Its retracement zone at $1272.70 to $1253.00 provided support.

The intermediate range is $1215.00 to $1356.00. Its retracement zone at $1285.50 to $1268.90 is additional support.

The short-term range is $1356.00 to $1267.90. Its retracement zone at $1312.00 to $1322.30 is the next potential upside target. Since the main trend is down, sellers could come in on a test of this zone.

The major retracement zone resistance is $1299.80 to $1325.90. This zone is controlling the longer-term direction of the market.


Weekly Technical Forecast

Based on last week’s price action and the close at $1288.80, the direction of the June Comex gold futures contract is likely to be determined by trader reaction to last week’s high at $1290.90.

Bullish Scenario

Taking out $1290.90 will confirm last week’s closing price reversal bottom. A sustained move over this level will indicate the presence of buyers. This could trigger a surge into the major 50% level at $1299.80.

Overcoming $1299.80 will indicate the buying is getting stronger. This could trigger a further rally into another 50% level at $1312.00 and a downtrending Gann angle at $1316.00.

Since the main trend is down, look for selling opportunities on tests of the retracement levels.

Bearish Scenario

The inability to overcome $1290.90 will signal the presence of sellers. Crossing to the weak side of the 50% level at $1285.50 will indicate the selling pressure is getting stronger. This could drive the gold market into a support cluster at $1272.70, $1268.90, last week’s low at $1267.90 and an uptrending Gann angle at $1263.30.

Look for an acceleration to the downside if $1263.30 fails as support with $1253.00 the next likely downside target. This is another trigger point for an even steeper decline with $1215.00 the next major downside target.

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