Gold Price Futures (GC) Technical Analysis – Trader Reaction to Minor 50% Level at $1954.80 Sets the Tone

Gold futures closed lower on Thursday but up from its low of the session as investors battled a number of factors including U.S. economic data and outside market influences.

Earlier in the session, gold fell over 1%, as positive economic data elevated hopes for a quick recovery while dampening the investment appeal of the precious metal.

On Thursday, December Comex gold futures settled at $1937.40, down $11.60 or -0.60%.

On the data front, a drop in U.S. jobless claims reported Thursday and positive manufacturing data reported earlier in the week are taking some shine off gold. A weaker Euro is also weighing on dollar-denominated gold by driving up thU.S. Dollar Index.

U.S. weekly jobless claims fell below 1 million last week for the second time since the pandemic started, but did not signal a strong recovery in the labor market because the drop largely reflected a change in the methodology used to address seasonal fluctuations in data. Earlier in the week, a report showed U.S. manufacturing activity accelerated to a near two-year high in August.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower based on the formation of two secondary lower tops at $2001.20 and $2024.60. A trade through $1908.40 will change the main trend to down.

The minor range is $1908.40 to $2001.20. Its 50% level at $1954.80 is potential resistance.

The short-term range is $2089.20 to $1874.20. Its retracement zone at $1981.70 to $2007.10 is resistance. This zone stopped the rally at $2001.20 earlier in the week.

The main support is the $1889.70 to $1842.60 retracement zone. This zone stopped the selling at $1874.20 on August 12.

Daily Swing Chart Technical Forecast

Based on Thursday’s price action and the current price at $1937.40, the direction of the December Comex gold market on Friday is likely to be determined by trader reaction to the minor 50% level at $1954.80.

Bearish Scenario

A sustained move under $1954.80 will indicate the presence of sellers. Taking out $1927.20 will indicate the selling is getting stronger. This could trigger a further break into the main bottom at $1908.40, followed by the main 50% level at $1889.70.

Bullish Scenario

Overtaking $1954.80 will signal the presence of buyers. If this move creates enough upside momentum then look for a potential surge into the short-term 50% level at $1981.70.