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James Hyerczyk

Gold futures are trading mixed on Wednesday as investors await the U.S. Federal Reserve’s interest rate and monetary policy decisions. Helping to underpin gold is another drop in U.S. Treasury yields, while a firmer U.S. Dollar and stock market are putting a lid on prices.

Investors will be monitoring the Federal Reserve’s first policy meeting of the year. The Federal Open Market Committee (FOMC) held the target range for the federal funds rate at 1.5-1.75% in December, following three consecutive rate cuts. Its latest announcement is due at 19:00 GMT, followed by remarks from Fed Chairman Jerome Powell at 19:30 GMT.

At 10:50 GMT, April Comex gold is trading $1576.30, up $0.50 or -0.03%.

Daily April Comex Gold

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1542.80 will change the main trend to down. A move through $1594.70 will reaffirm the uptrend.

The minor trend is also up. A move through $1552.10 will change the minor trend to down. This will shift momentum to the downside.

The main range is $1458.50 to $1619.60. Its retracement zone at $1539.10 to $1520.00 is the major support area. This is controlling the longer-term direction of the market.

The intermediate range is $1619.60 to $1542.80. Its retracement zone at $1581.20 to $1590.30 is resistance. This may have helped stop the rally at $1594.70 on January 27.

The short-term range is $1542.80 to $1594.70. Its retracement zone at $1568.80 to $1562.60 is acting like support today. Earlier today, buyers came in at $1567.90, just slightly below the upper level. Trader reaction to this zone could determine the short-term direction of the market.

Daily April Comex Gold

Daily Technical Forecast

Based on the early price action and the current price at $1575.50, the direction of the April Comex gold market the rest of the session on Wednesday is likely to be determined by trader reaction to the short-term 50% level at $1568.80.

Bullish Scenario

A sustained move over $1568.80 will indicate the presence of buyers. This could lead to a labored rally with potential upside targets at $1581.20 and $1582.80.

Overtaking $1582.80 will indicate the buying is getting stronger with $1590.30, $1591.60 and $1594.70 additional upside targets. Taking out $1594.70 could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under $1568.80 will signal the presence of sellers. This could lead to a test of the support cluster at $1563.60 to $1562.60. Watch for a technical bounce on the first test of this area.

If $1562.60 fails then look for the selling to possibly extend into the next uptrending Gann angle at $1552.80.

Side Notes

We could be looking at a potentially bearish secondary top at $1594.70. We’ll know for sure if $1542.80 is taken out. However, don’t expect a plunge unless the selling is strong enough to take out the main Fibonacci level at $1520.00.

The number of support and resistance levels, coupled with uncertainty over the impact of the coronavirus on China’s economy, or for that matter, the global economy, could help hold prices in a trading range.

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