Gold Price Futures (GC) Technical Analysis – Trader Reaction to $1798.80 – $1770.40 Sets Near-Term Tone

Gold futures are down over 2% late Thursday as the U.S. Dollar gained ground after the U.S. Federal Reserve struck a hawkish tone on monetary strategy. A majority of 11 Fed officials on Wednesday projected at least two quarter-point rate hikes for 2023, although officials pledged to keep policy supportive for now to encourage a jobs recovery.

At 20:32 GMT, August Comex gold is trading $1774.25, down $38.25 or -2.11%.

Adding to gold’s headwinds, the U.S. central bank said it would consider whether it should taper its asset purchases at every subsequent policy meeting.

The market was also pressured by a strong U.S. Dollar, and the news that China would take steps to cool off rising prices.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the April 29 main bottom at $1756.80 will reaffirm the downtrend. This could trigger a further break into the April 13 main bottom at $1725.50.

A trade through $1906.90 will change the main trend to up. This is highly unlikely, but since the market is down seven sessions from its last main top, we have to start watching for a closing price reversal bottom. This won’t change the main trend to up, but if confirmed, it could trigger the start of a 2 to 3 day correction.

The main range is $1678.40 to $1919.20. The market is currently testing the lower or Fibonacci level of its retracement zone at $1770.40. The 50% level is up at $1798.80.

Short-Term Outlook

We’re going to be watching the price action and reading the order flow at $1770.40 over the short-term to determine if the buying is starting to become stronger than the selling at this level.

If $1770.40 fails as support then look for the selling to possibly extend into $1756.80. If this fails then look for a possible acceleration to the downside with the next target the April 13 main bottom at $1725.50.

Essentially, we’re going to be watching to see if the liquidation selling will continue, or if counter-trend value-seekers will step in to stop the price slide.