Gold Price Futures (GC) Technical Analysis – Thin Pre-Holiday Volume Ignites Dramatic Reversal Bottom

Gold futures posted a dramatic turnaround on Tuesday after aggressive counter-trend buyers came in to defend the recent bottom at $1446.20. The headlines are saying that doubts over a U.S.-China trade deal drove investors into gold, but I suspect thin pre-holiday trading conditions had a lot to do with the powerful reversal.

At 19:21 GMT, December Comex gold is trading $1461.40, up $4.50 or +0.31%.

Stock market profit-taking and position-squaring in the U.S. Dollar and Treasurys ahead of the U.S. holiday on Thursday also drove investors into gold. Since the intraday reversal wasn’t tied to any major comments from U.S. or Chinese officials, I don’t think the move was trade deal related. Investors are basically looking for more details.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1446.20 will reaffirm the downtrend. A trade through $1469.20 will change the main trend to up.

A closing price reversal bottom on Tuesday will not affect the trend, but it could lead to the start of a 2 to 3 day counter-trend rally.

Resistance is a series of retracement levels. The first is the main Fibonacci level at $1461.30. The second is the short-term Fibonacci level and the third is the main 50% level at $1481.30.

Daily Technical Forecast

Based on the earlier price action and the current price at $1461.40, the direction of the December Comex gold futures contract into the close on Tuesday is likely to be determined by trader reaction to yesterday’s close at $1456.90.

Bullish Scenario

A sustained move over $1456.90 will indicate the presence of buyers. The first upside target is the main Fibonacci level at $1461.30. Taking out this level could trigger a late session acceleration into $1471.00.

Bearish Scenario

A sustained move under $1456.90 will signal the presence of sellers. If this move creates enough downside momentum then look for a potential break into the long-term uptrending Gann angle at $1448.40. This is followed by the main bottom at $1446.20.

The main bottom at $1446.20 is a potential trigger point for an acceleration to the downside.