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James Hyerczyk
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Gold

Gold futures are edging lower on Monday shortly before the New York opening as firming U.S. Treasury yields supported the U.S. Dollar, while weighing on foreign demand for dollar-denominated gold. The selling pressure is likely the spillover effect from Friday’s better-than-expected U.S. Producer Prices Index (PPI) report that lifted prospects for higher inflation and interest rates.

At 10:17 GMT, June Comex gold is trading $1741.10, down $3.70 or -0.21%.

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On Friday, the U.S. government reported that producer prices rose more than anticipated in March, resulting in the highest annual rise in 9-1/2 years and signaling the start of higher inflation as the economy reopens amid strengthened public health and substantial government assistance.

Some investors view gold as a hedge against higher inflation, but higher Treasury yields dampen some of the appeal of the non-yielding precious metal.

Daily June Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1759.40 will signal a resumption of the uptrend. The main trend will change to down on a trade through $1677.30.

The minor trend is also up. The new minor top is $1759.40.

Gold is currently trading inside a major retracement zone at $1711.90 to $1788.50. This zone is controlling the longer-term direction of gold prices.

The minor range is $1677.30 to $1759.40. Its 50% level at $1718.40 is potential support.

The short-term range is $1817.60 to $1676.20. The market is currently testing its 50% level at $1746.90.

The main range is $1858.90 to $1676.20. Its 50% level at $1767.60 is potential resistance.

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Daily Swing Chart Technical Forecast

The early price action suggests the direction of the June Comex gold futures contract on Monday is likely to be determined by trader reaction to $1746.90.

Bullish Scenario

A sustained move over $1746.90 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $1759.40, followed by $1767.60. The latter is a potential trigger point for an acceleration into $1788.50.

Bearish Scenario

A sustained move under $1746.90 will signal the presence of sellers. This could create the downside momentum needed to challenge $1718.40, followed closely by $1711.90.

Taking out the long-term Fibonacci level at $1711.90 could trigger an acceleration to the downside with the next target the main bottom at $1677.30.

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