Gold Price Futures (GC) Technical Analysis – Trade Through $1755.90 Will Confirm Momentum Shift

Gold futures are inching lower on Tuesday, pressured by a surge in the U.S. Dollar. Losses are being limited, however, as bond yields fell shortly before the start of the U.S. Federal Reserve’s two-day meeting.

At 12:07 GMT, December Comex gold futures are trading $1734.50, down $2.60 or -0.15%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $160.25, down $0.42 or -0.26%.

Traders Bracing for Fed Rate Hike

Gold traders are preparing for the U.S. Federal Reserve to raise interest rates by 75 basis points at the conclusion of its policy meeting on Wednesday. Traders are saying a hike of that size will essentially wipe out all of the pandemic-era support for the economy.

Traders are looking for the 75 basis point hike after dialing down bets of a 100 bps hike following recent weak economic data.

Fed Powell’s Press Conference Comments Likely to Set the Tone

After the Fed makes its interest rate announcement, all eyes will shift to Fed Chair Powell’s press conference where they are hoping he reveals some insight into the Fed’s future rate hike plans.

For example, if Powell comes across as dovish amid growing speculation about a potential recession, it could weaken the dollar and give gold a short-term boost. However, we don’t expect the rally to last too long because the Fed is likely to continue to lift rates into the end of the year.

Daily Swing Chart Technical Analysis

The main trend is down. However, momentum shifted to the upside following the confirmation of the closing price reversal bottom on July 21.

A trade through $1880.00 will change the main trend to up. A move through $1696.10 will negate the closing price reversal bottom and signal a resumption of the downtrend. Taking out the long-term main bottom at $1694.50 will reaffirm the downtrend.

The minor trend is also down. A trade through $1755.90 will change the minor trend to up. This will confirm the shift in momentum. A move through $1763.10 will reaffirm the shift in momentum.

On the downside, the first support is a pivot at $1729.60. This is followed by a long-term 50% level at $1709.10.

On the upside, the nearest resistance is the short-term retracement zone at $1798.50 to $1822.60.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at $1729.60 is likely to determine the direction of the December Comex gold futures contract on Tuesday.

Bullish Scenario

A sustained move over $1729.60 will indicate the presence of buyers. Taking out the two minor tops at $1755.90 and $1763.10 will indicate the short-covering is getting stronger. This may be enough to trigger an acceleration into the retracement zone at $1798.50 to $1822.60.

Bearish Scenario

A sustained move under $1729.60 will signal the presence of sellers. This could trigger a break into the long-term 50% level at $1709.10, followed by the short-term main bottom at $1696.10 and the long-term main bottom at $1694.50. The latter is a potential trigger point for an acceleration to the downside with $1618.00 the next major target.