Gold Price Futures (GC) Technical Analysis – Trade Through $1867.90 Changes Trend; Strengthens Over $1875.00

Gold futures are edging higher on Thursday, supported by a weaker U.S. Dollar, but capped by steady U.S. Treasury yields.

The market is also trading higher for the week as investors shrug off higher yields and a surge in the dollar on renewed concerns over soaring inflation and the prospects of aggressive monetary tightening by the Federal Reserve.

Some traders are saying the market is getting support from a weaker stock market and worries about a global economic slowdown.

At 10:08 GMT, August Comex gold futures are trading $1857.40, up $8.70 or +0.47%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $172.27, up $1.13 or +0.66%.

Traders React Positively to Jamie Dimon’s Doom and Gloom Warning

A warning from JPMorgan Chase CEO Jamie Dimon on Wednesday may sent gold short-sellers running for cover after he said he is preparing the biggest U.S. bank for an economic hurricane on the horizon and advised investors to do the same.

“You’d better brace yourself,” Dimon told a roomful of analysts and investors. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”

There are two main factors that has Dimon worried:  the aggressive Fed tightening, and the war in Ukraine and its impact on commodities, including food and fuel.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1830.20 will signal a resumption of the downtrend. Taking out $1867.90 will change the main trend to up. A move through $1875.00 will reaffirm the uptrend.

Currently, the market is straddling a short-term pivot at $1854.80. Gold is also trading on the strong side of long-term Fibonacci support at $1844.00 and a minor pivot at $1833.50.

On the upside, the best targets are a pair of 50% levels at $1890.00 and $1900.30.

Daily Swing Chart Technical Forecast

Trader reaction to $1854.80 and $1833.50 is likely to determine the near-term direction of the August Comex gold futures contract.

Bullish Scenario

A sustained move over $1854.80 will indicate the presence of buyers. If this move produces enough upside momentum then look for buyers to attack the two main tops at $1867.90 and $1875.00.

Taking out the main tops could trigger a surge into the pair of 50% levels at $1890.00 to $1900.30.

Bearish Scenario

The inability to sustain a rally over $1854.80 will be the first sign of weakness. Falling below the long-term Fib at $1844.00 will indicate the selling is getting stronger. However, taking out the 50% level at $1833.50 could trigger an acceleration to the downside with the next major target $1792.00 to $1787.80.

Side Notes

I’m not clear on the fundamentals driving the market at this time. I just know the short-term chart pattern is suggesting a secondary higher bottom may be forming. This could lead to a change in trend and an acceleration to the upside.

Fundamentally, this could just be one of those times when gold, the dollar and Treasury yields all move in the same direction. It doesn’t happen over the long-run, but we’ve seen it work over short-term periods of time.