Gold Price Futures (GC) Technical Analysis – Testing Lower End of Two-Month Trading Range

Gold futures are trading sharply lower late in the session on Tuesday as sellers dumped the market following a sharp rise in U.S. Treasury yields, a surge in the U.S. Dollar against a basket of currencies, and firm demand for U.S. equities.

The catalyst behind the selling pressure on Tuesday was likely the release of better-than-expected U.S. ISM non-manufacturing data for October. This news helped ease concerns over a U.S. recession, one of the reasons why investors had been holding onto long gold positions.

Bullish gold traders had also been banking on deeper rate cuts by the major central banks, but many have signaled they are taking a pause in their easing cycles. This also encouraged the liquidation of long futures contracts.

At 18:28 GMT, December Comex gold is trading 1483.70, down $27.40 or -1.81%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1478.00 will reaffirm the downtrend. The main trend will change to up on a trade through $1522.30.

The minor trend is also down. A trade through $1483.10 will signal a resumption of the downtrend. A move through $1519.00 will change the minor trend to up.

The major range is $1396.40 to $1566.20. Its retracement zone at $1481.30 to $1461.30 is the major support zone controlling the longer-term direction of the market.

The intermediate range is $1412.10 to $1566.20. Its retracement zone at $1489.20 to $1471.00 is also a potential support zone.

Combining the two retracement zones creates a series of levels at $1489.20, $1481.30, $1471.00 and $1461.30. All of these levels could slow down the selling pressure.

The short-term range is $1566.20 to $1465.00. Its retracement zone at $1515.60 to $1527.50 is resistance. This zone stopped the buying four times at $1519.00, $1520.90, $1522.30 and $1525.80.

Daily Technical Forecast

Based on the early price action and the current price at $1483.70, the direction of the December Comex gold futures contract into the close is likely to be determined by trader reaction to the 50% levels at $1489.20 and $1481.30.

Bearish Scenario

A sustained move under $1481.30 will indicate the presence of sellers. The next downside target is the main bottom at $1478.00, followed by a Fibonacci level at $1471.00, another main bottom at $1465.00 and another Fibonacci level at $1461.30. This is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over $1489.20 will signal the return of buyers. If this move is able to generate enough upside momentum, the market could eventually rally back to $1515.60.