Gold Price Futures (GC) Technical Analysis – Testing Major Retracement Zone at $1933.20 to $1972.40

Gold futures soared over 2% on Monday on renewed fears of more restrictions and lockdowns tied to a surge in global coronavirus cases. The price action suggests investor confidence in the vaccines may be waning. Not in the effectiveness of the vaccine, but in the distribution of vaccinations.

The slow pace of vaccinations, especially in the United States, may be raising fears that the global recovery may be derailed or the U.S. recovery may be pushed further into the future. Delaying the recovery would open the door to even more stimulus measures from the government or Fed.

At 21:36 GMT, February Comex gold futures are trading $1947.30, up $52.20 or +2.75%.

Late in the day on Monday, British Prime Minister Boris Johnson imposed a national lockdown on England to combat the new COVID variant. Johnson said England’s health system is at risk of becoming overwhelmed in 21 days without a national lockdown.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the next swing top at $1973.30 will reaffirm the downtrend. The main trend will change to down on a move through $1820.00.

The minor trend is also up. A move through $1859.00 will change the minor trend to down. This will also shift momentum to the downside.

The main range is $2099.20 to $1767.20. The market is currently testing its retracement zone at $1933.20 to $1972.40. This zone is controlling the near-term direction of the market.

Short-Term Outlook

The direction of the February Comex gold market into the close on Monday is likely to be determined by trader reaction to $1933.20.

Over the near-term, however, trader reaction to the 50% level at $1933.20 and the 61.8% level at $1972.40 will determine whether the market retraces the rally from $1767.20, or if buyers continue to drive prices toward last year’s high at $2099.20.

For a look at all of today’s economic events, check out our economic calendar.