Gold Price Futures (GC) Technical Analysis – Trader Reaction to $1813.00 Sets Early Tone on Tuesday

Gold futures are trading lower late Monday after traders were chopped up throughout the session due to heightened volatility in the stock market. A plunge in Treasury yields helped provide support, but a surge in the U.S. Dollar weighed on prices.

At 20:45 GMT, August Comex gold is trading $1812.90, down $2.10 or -0.12%.

The dollar index hit a more than three-month high, making gold more expensive for other currency holders, and countering the sharp fall in U.S. benchmark Treasury yields.

Sentiment in riskier markets was bruised by investors’ fears over a relentless surge in coronavirus cases, which forced many Asian countries into imposing lockdowns, and growing inflationary pressures.

Reflective of sentiment, holdings of the largest gold-backed exchange fund (ETF), New York’s SPDR Gold Trust dropped to a two-month low on Friday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1835.00 will change the main trend to up. A move through $1750.10 will signal a resumption of the downtrend.

The major support is a long-term retracement zone at $1798.80 to $1770.40. This zone was tested successfully on Monday when the selling pressure stopped at $1795.00.

Inside the long-term retracement zone is a short-term retracement zone at $1792.60 to $1782.50.

The minor range is $1791.00 to $1835.00. Its 50% level or pivot at $1813.00 is being tested into the close.

The main range is $1919.20 to $1750.10. If the main trend changes to up then look for a test of its retracement zone at $1834.70 to $1854.60.

Daily Swing Chart Technical Forecast

The direction of the August Comex gold market on the opening on Tuesday is likely to be determined by trader reaction to the minor pivot at $1813.00.

Bullish Scenario

A sustained move over $1813.00 will indicate the presence of buyers. If this move is able to generate early upside momentum then look for a move into the resistance cluster at $1834.70 to $1835.00.

Taking out $1835.00 will change the main trend to up and could trigger an acceleration into the pivot at $1854.60.

Bearish Scenario

A sustained move under $1813.00 will signal the presence of sellers. This could trigger a further break into a series of potential support levels at $1798.80, $1792.60, $1782.50 and $1770.40.

Monday’s price action indicates that despite the downtrend, aggressive counter-trend buyers are willing to come in on weakness.