Gold Price Futures (GC) Technical Analysis – Testing Major Retracement Zone at $1781.00 – $1757.10

Gold futures are edging lower shortly before the mid-session on Wednesday as traders await the U.S. Federal Reserve’s decisions on the pace of the withdrawal of government stimulus and future interest rate hikes. In other news, gold traders showed little reaction to the U.S. Retail Sales report that showed a smaller-than-expected increase in November.

At 15:42 GMT, February Comex gold futures are trading $1766.40, down $5.90 or -0.33%. The SPDR Gold Shares ETF (GLD) is at $165.08, down $0.36 or -0.22%.

The Fed is expected to announce that it is speeding up the end of its bond purchases and signal a turn to interest rate increases next year as a guard against surging inflation.

Headlines aside, gold traders should be zeroing in on Fed Chair Jerome Powell’s post-meeting press conference to see if he fuels or dampens rate hike expectations. Although faster tapering and rate hikes should be bearish for gold, Powell’s concern over the potential impact of the Omicron coronavirus variant on the economy could trigger a reversal to the upside in gold prices.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1762.20 will signal a resumption of the downtrend. Taking out $1761.00 will reaffirm the downtrend.

A move through $1792.80 will change the main trend to up, while a trade through $1794.30 will reaffirm the change in trend. This could trigger an acceleration to the upside.

The long-term retracement zone support is $1781.00 to $1757.10. The gold market is currently testing this area.

The minor range is $1819.30 to $1762.20. Its 50% level at $1790.80 is resistance.

The short-term range is $1881.90 to $1762.20. Its 50% level at $1822.10 is the primary upside target.

Daily Swing Chart Technical Forecast

The direction of the February Comex gold futures contract into the close on Wednesday is likely to be determined by trader reaction to $1772.30.

Bearish Scenario

A sustained move under $1772.30 will indicate the presence of sellers. Taking out $1762.20 and $1761.00 will reaffirm the downtrend. This could trigger a quick break into the major Fibonacci level at $1757.10.

The Fib level at $1757.10 is a potential trigger point for an acceleration to the downside with the September 29 main bottom at $1723.70 the next likely target.

Bullish Scenario

A sustained move over $1772.30 will signal the presence of buyers. This could create a labored rally with potential upside targets a major 50% level at $1781.00, a minor 50% level at $1790.80 and a pair of main tops at $1792.80 and $1794.30.

The main top at $1794.30 is a potential trigger point for an acceleration to the upside with the next targets at minor top at $1819.30, followed by a short-term 50% level at $1822.10.