Gold Price Futures (GC) Technical Analysis – Testing Long-Term Retracement Zone at $1787.30 to $1711.70

Gold futures are trading nearly flat on Thursday after testing an 11-week low earlier in the session, underpinned by a weaker U.S. Dollar and a slight dip in U.S. Treasury yields.

The slight recovery in the market was likely related to value-seeking buyers with gold testing a major 50% to 61.8% retracement zone.

Traders showed little reaction to a government report that showed initial claims for state unemployment benefits were 861,000 last week, compared with 848,000 in the prior week and the 775,000 forecast.

Perhaps better than expected data from the Philly Fed and higher than expected building permits kept a lid on prices. The Philly Fed Manufacturing Index came in at 23.1, below the previously reported 26.5, but better than the 20.3 forecast. Building Permits at 1.88M beat both the forecast and previous read.

At 19:48 GMT, April Comex gold is trading $1774.60, down $0.50 or -0.03%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out yesterday’s low. A trade through $1856.60 will change the main trend to up.

Gold is currently trading inside a long-term retracement zone at $1787.30 to $1711.70. This zone represents value so we could start to see some bottom-picking.

The minor range is $1856.60 to $1766.60. Its 50% level at $1811.60 is the first resistance target.

Short-Term Forecast

The price action on Thursday suggests the direction of the April Comex gold market over the short-run is likely to be determined by trader reaction to the long-term 50% level at $1787.30.

Bearish Scenario

A sustained move under $1787.30 will indicate the presence of sellers. Taking out this week’s low at $1766.60 will indicate the selling is getting stronger.

The next key downside target is the long-term Fibonacci level at $1711.70. We expect the market to grind into this level as counter-trend buyers are likely to slow down the pace of the selling. If there is surprise news then we could see an acceleration into this target.

Bullish Scenario

A sustained move over $1787.30 will signal the presence of aggressive counter-trend buyers. This could create the upside momentum needed to challenge the minor pivot at $1811.60. Overcoming this level could trigger an acceleration to the upside with $1856.60 and $1866.70 the next potential upside targets.