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James Hyerczyk

Gold futures are trading lower on Thursday as investors booked profits from recent rallies, while some investors decided to move money out of bullion and into the U.S. Dollar for safe-haven reasons.

Fundamentally, the longer-term view is still bullish with plenty of stimulus money floating around out there. Over the short-run, however, those traders looking for an excuse to book profits, found one in the form of renewed concerns over simmering tensions between the United States and China.

Some investors also believe that gold and stocks are moving lock-step again. With stocks a little overbought, they feel a correction in stocks will be a drag on gold also.

At 20:11 GMT, June Comex gold is trading $1724.70, down $26.70 or -1.68%.

In economic news, first-time filings for unemployment insurance totaled 2.44 million last week as the tail effects of the coronavirus shutdown continued to impact the U.S. jobs market. Traders were looking for 2.4 million claims.

Manufacturing activity in the U.S. improved in May but remains muted amid lackluster demand that has led to steep job cuts, according to a closely watched gauge.

The IHS Markit Flash U.S. Manufacturing PMI Index registered a 39.8 reading for the month, up from 36.1 in April and a shade better than the 39 that economists surveyed by Dow Jones had expected.

Daily June Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside on Thursday. A trade through $1775.80 will signal a resumption of the uptrend. The main trend changes to down on a trade through the last swing bottom at $1676.00.

The minor trend is down. The trade through $1727.20 on Thursday changed the main trend to down, shifting momentum to the downside. Taking out $1757.60 will change the minor trend to up.

The short-term range is $1788.80 to $1666.20. Its 50% level at $1727.50 is controlling the near-term direction of the market.

The main range is $1576.00 to $1788.80. Its retracement zone at $1682.40 to $1657.30 is the primary downside target. This is a major support area, having stopped sellers at $1676.00 and $1666.20.


Short-Term Outlook

Based on Thursday’s price action, the direction of the June Comex gold over the near-term is likely to be determined by trader reaction to $1727.50.

Bullish Scenario

Overcoming and sustaining a rally over $1727.50 will indicate the return of buyers. Taking out $1757.60 will shift momentum back to the upside. This could trigger a test of $1775.80.

Bearish Scenario

A sustained move under $1727.50 will signal the presence of sellers. If this move is able to create enough downside momentum the look for an eventual test of $1682.40 to $1657.30.

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