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Gold Price Futures (GC) Technical Analysis – Trader Reaction to $1728.70 Sets Near-Term Tone

By:
James Hyerczyk
Published: Jun 11, 2020, 21:19 UTC

The direction of the U.S. Dollar will be the key to the next major move in gold.

Comex Gold

Gold prices rose to a one-week high early in the session on Thursday over fears of a fresh wave of coronavirus infections and the U.S. Federal Reserve’s pledge to keep interest rates low. However, the market gave back more than half of those gains throughout the session as a steep drop in the stock market drove investors into the safety of the U.S. Dollar. A stronger U.S. Dollar tends to drive down foreign demand for dollar-denominated gold.

At 20:48 GMT, August crude oil futures are trading $1735.50, up $14.80 or +0.86%. This is down from a high of $1754.90.

Safe-haven buying was behind the rally in the U.S. Dollar. Furthermore, the steep drop in U.S. equities may have encouraged investors to sell gold in order to raise the cash to meet market calls and cover losses.

Daily August Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1761.00 will change the main trend to up. A move through $1671.70 will signal a resumption of the downtrend.

The short-term range is $1789.00 to $1668.40. Its retracement zone at $1728.70 is the key level to watch. The market found support on this level on Thursday.

The minor range is $1671.70 to $1754.90. Its 50% level at $1713.30 is potential support.

The main range is $1454.80 to $1789.00. Its retracement zone at $1621.90 to $1582.40 is the major downside target and value zone.

Short-Term Forecast

A sustained move over $1728.70 will indicate the presence of buyers. Taking out $1761.00 will change the main trend to up and could create enough upside momentum to challenge a pair of main tops at $1787.50 and $1789.00.

A failure to hold $1728.70 will indicate the buying is weak. This could lead to a test of $1713.30. This is a potential trigger point for an acceleration into $1671.70 and $1668.40.

The direction of the U.S. Dollar will be the key to the next major move in gold. If the dollar becomes the go-to safe-have asset again then gold prices could drop.

Furthermore, if the selling pressure continues in the stock market then we could see the same move we saw in March, where investors sold gold to raise cash to meet stock market margin calls and to raise cash to cover losses.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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