Gold Price Futures (GC) Technical Analysis – Traders Eyeing US GDP Data for Hints About Looming Recession

Gold futures jumped to a two-week high on Wednesday as the U.S. Dollar continued to slide amid hopes the U.S. Federal Reserve will slow down the pace of interest rate hikes at upcoming policy meetings. The loss by the greenback to a more than one-month low against a basket of peers, made bullion less expensive for holders of foreign currencies.

On Wednesday, December Comex gold futures settled at $1669.20, up $11.20 or +0.67%. Additionally, the SPDR Gold Shares ETF (GLD) finished at $154.99, up $0.99 or +0.64%.

Gold prices were also supported by a drop in U.S. Treasury yields. The benchmark 10-year Treasury note fell as markets absorbed housing sector data and paid close attention to earnings reports, scanning the numbers for hints about a looming recession.  Falling yields tend to drive up demand for bullion as they reduce the carrying cost of the non-yielding asset.

Traders are now bracing for the release of reports on U.S. Advance GDP, Durable Goods and Weekly Unemployment Claims. Weaker than expected data is not likely to sway the Fed from raising interest rates at next week’s monetary policy meeting, but it could encourage policymakers to soften the tone about a rate hike in December. This would drive Treasury yields lower, thereby weakening the U.S. Dollar and propel gold prices higher.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $1738.70 will change the main trend to up, while a move through the main bottom at $1621.10 will reaffirm the downtrend.

The minor trend is up. It changed to up on Wednesday when buyers took out the previous minor top at $1675.50. The move shifted momentum to the upside. A trade through $1641.20 will change the minor trend to down.

The minor range is $1621.10 to $1679.40. Its pivot at $1650.30 is support.

The short-term range is $1738.70 to $1621.10. Its retracement zone at $1679.90 to $1693.80 is resistance.

Additional resistance is the long-term 50% level at $1709.10, followed by the main retracement zone at $1722.90.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term 50% level a $1679.90 is likely to determine the direction of the December Comex gold futures contract early Thursday.

Bullish Scenario

A sustained move over $1679.90 will indicate the presence of buyers. This could trigger a surge into the short-term Fibonacci level at $1693.80, followed by the long-term 50% level at $1709.10.

Bearish Scenario

A sustained move under $1679.90 will signal the presence of sellers. If this creates enough downside momentum then look for a test of the pivot at $1650.30.

The first target under $1650.30 is the minor bottom at $1641.20. A trade through this level will change the minor trend to down with the next target a support cluster at $1621.10 to $1618.00.