Gold Price Futures (GC) Technical Analysis – Trader Reaction to $1865.00 Pivot Sets the Tone

Gold futures are inching higher shortly before the regular session opening on Tuesday as prices consolidate ahead of the start of the two-day Federal Reserve monetary policy meeting. The market is being supported by slightly weaker Treasury yields and U.S. Dollar.

At 10:18 GMT, August Comex gold is trading 1866.60, up $0.70 or +0.04%.

Benchmark U.S. 10-year Treasury yields slipped below 1.50% to hover near a three-month low, while the U.S. Dollar dipped for a second session after posting an impressive gain last week.

The price action suggests trader uncertainty ahead of Wednesday’s Fed decisions. The recent data showing a spike in U.S. consumer prices has benefited gold as it is seen as a hedge against inflation. But, rising inflation concerns could also force policymakers into an earlier tapering of currency-depreciating stimulus.

Later today at 12:30 GMT, gold traders will get the opportunity to react to the latest data on May producer prices and retail sales.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1845.70 will signal a resumption of the downtrend. A move through $1906.90 will change the main trend to up.

The minor trend is also down. A move through $1906.20 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is $1810.70 to $1919.20. The market is currently straddling its 50% level at $1865.00.

The minor range is $1919.20 to $1845.70. Its 50% level at $1882.50 is the nearest upside target. This is followed by the long-term 50% level at $1899.20.

On the downside, additional support levels are a series of 50% levels at $1838.00, $1822.40 and $1799.30.

Daily Swing Chart Technical Forecast

The direction of the August Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the pivot at $1865.00.

Bullish Scenario

A sustained move over $1865.00 will indicate the presence of buyers. This could trigger a surge into the minor pivot at $1882.50. Sellers could come in on the first test of this level. Overtaking it could trigger an acceleration into $1899.20.

Bearish Scenario

A sustained move under $1865.00 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into $1845.70, followed by a 50% level at $1838.00.