Gold Price Futures (GC) Technical Analysis – Trade Through $1798.20 Confirms Closing Price Reversal Top
Gold futures are inching higher on Tuesday as traders await the release of a pair of U.S. economic reports that could help determine the pace of Federal Reserve interest rate hikes.
On Monday, gold prices plunged as U.S. Treasury yields soared as investors braced for what could be an earlier-than-expected interest rate hike by the Federal Reserve this year despite the recent jump in COVID-19 cases. Higher yields raise the opportunity cost of holding non-interest paying gold.
U.S. Treasury yields climbed on Tuesday morning, ahead of the release of November’s job openings report. A better-than-expected report will indicate a strengthening labor market that will encourage the Fed to lift rates sooner-than-expected.
The JOLTS Job Openings report is expected to show a rise from 11.03 million to 11.06 million. The ISM Manufacturing PMI report is expected to come in at 60.0, slightly below the previous 61.1 reading. The small drop will reflect the impact of Omicron on the supply chain.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum will shift to the downside if Monday’s closing price reversal top is confirmed.
A trade through $1833.00 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $1798.20 will confirm the potentially bearish chart pattern. This will shift momentum to the downside and could trigger the start of a 2 to 3 day sell-off. The main trend will change to down on a move through $1785.00.
The minor trend is also up. A trade through $1789.10 will change the minor trend to down. This will confirm the shift in momentum.
The main range is $1881.90 to $1753.00. Its retracement zone at $1817.50 to $1832.70 is resistance. It stopped the rally on Monday.
The market is currently trading on the weak side of a pivot at $1809.00, making it potential resistance.
On the downside, the nearest potential support is the pivot at $1793.00. This is followed by the long-term support zone at $1781.00 to $1757.10.
Daily Swing Chart Technical Forecast
The direction of the February Comex gold futures contract on Tuesday is likely to be determined by trader reaction to $1809.00.
A sustained move under $1809.00 will indicate the presence of sellers. Taking out $1798.20 will confirm the closing price reversal top. This could extend the selling into $1793.00, followed by the minor bottom at $1789.10 and the main bottom at $1785.00. This would set up a potential test of the major retracement zone at $1781.00 to $1757.10.
A sustained move over $1809.00 will signal the presence of buyers. This could trigger an acceleration into a resistance cluster at $1815.60 to $1817.50. If the trend is getting ready to turn lower, then sellers are likely to come in on a test of this zone.