Gold Price Futures (GC) Technical Analysis – Testing Retracement Zone Resistance at $1817.50 – $1832.70

Gold futures are trading higher early Friday, following through to the upside after a strong performance the previous session. The catalysts behind the rally are lower Treasury yields. A firmer U.S. Dollar may be limiting gains. There are no major fundamental announcements so the price action suggests extremely low holiday volume may be behind the rally. Some analysts see hedging pressure and support from Asian buyers.

“Year-end risk hedging has pushed gold higher overnight and is keeping gold supported in Asia, despite a modest U.S. Dollar rally overnight,” said Jeffrey Halley, a senior market analyst at OANDA.

At 07:29 GMT, February Comex gold futures are trading $1820.90, up $6.80 or +0.37%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $169.79, up $1.20 or +0.71%.

Benchmark 10-year U.S. Treasury yields dipped from one-month highs with no major catalysts to drive market direction and many traders out before the New Year’s holiday, which reduced the opportunity cost of holding bullion which pays no interest.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1821.60 will signal a resumption of the uptrend. A move through $1785.00 will change the main trend to down.

The minor range is also up. A trade through $1789.10 will change the minor trend to down. This will shift momentum to the downside.

The main range is $1881.90 to $1753.00. The market is currently testing its retracement zone at $1817.50 to $1832.70. This zone is controlling the near-term direction of the market.

The minor range is $1785.00 to $1821.60. Its 50% level at $1803.30 is the nearest support. This level will move higher if buyers take out $1821.60.

Additional support is a pair of 50% levels at $1787.30 and $1781.00.

Daily Swing Chart Technical Forecast

The direction of the February Comex gold futures contract on Friday is likely to be determined by trader reaction to $1817.50.

Bullish Scenario

A sustained move over $1817.50 will indicate the presence of buyers. The first upside target is $1821.60. Taking out this level will indicate the buying is getting stronger. This could trigger a further rally into the main Fibonacci level at $1832.70. This is the trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $1817.50 will signal the presence of sellers. If this move generates enough downside momentum then look for a break into $1803.30.

If the selling is strong enough to take out $1803.30 then look for the selling to possibly extend into the price cluster at $1789.10, $1787.30, $1785.00 and $1781.00. This area is propping up the market.