Gold Price Futures (GC) Technical Analysis – Trader Reaction to $1738.60 Fibonacci Level Sets the Daily Tone

Gold futures are edging higher early Wednesday, mirroring the price action in U.S. Treasury yields and the U.S. Dollar. Nonetheless, the market is still hovering just above a seven-week low that was struck the previous session as Treasury yields jumped on growing expectations of an earlier-than-anticipated interest rate hike by the U.S. Federal Reserve.

At 04:21 GMT, December Comex gold futures are trading $1738.90, up $1.40 or +0.08%.

The U.S. Dollar Index hovered near a more than 10-month high, touched on Tuesday. The benchmark U.S. 10-year Treasury yields held close to over a three-month peak, increasing the opportunity cost of holding non-interest bearing bullion.

Gold futures found some support on Tuesday after Fed Chair Jerome Powell cast some doubt over a quicker than expected rate hike when he said the U.S. economy is still far from achieving maximum employment, a key component of the central bank’s requirements for raising interest rates.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1727.80 will signal a resumption of the downtrend. The main trend will change to up on a move through $1788.40.

The main range is $1677.90 to $1836.90. Gold is currently testing its retracement zone at $1738.60 to $1757.40. This area is potential resistance.

The short-term range is $1836.90 to $1727.80. Its 50% level at $1782.40 is the next key upside target.

On the downside, the nearest support is the long-term Fibonacci level at $1716.00.

Daily Swing Chart Technical Forecast

The direction of the December Comex gold market on Wednesday is likely to be determined by trader reaction to $1738.60.

Bullish Scenario

A sustained move over $1738.60 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into a pair of 50% levels at $1757.40 and $1758.10. Since the main trend is down, look for sellers on the first test of this area.

Overtaking $1758.10 could trigger an acceleration to the upside with $1782.40 the next potential upside target.

Bearish Scenario

A sustained move under $1738.60 will signal the presence of sellers. If this creates enough downside momentum then look for a retest of $1727.80. Taking out this level could extend the selling into $1716.00.

The long-term Fibonacci level at $1716.00 is a potential trigger point for an acceleration to the downside with the August 8 main bottom at $1677.90 the next likely target price.