Gold Price Futures (GC) Technical Analysis – Trading on Weakside of Long-Term Retracement Zone

Gold futures are down sharply for a second session as higher Treasury yields made the U.S. Dollar a more attractive asset, while reducing foreign demand for the dollar-denominated asset.  The catalyst behind the move were expectations that speedy vaccinations would lead to a rapid recovery in the U.S. economy, reducing the need to hold gold for safe-haven protection.

At 12:05 GMT, June Comex gold futures are trading $1688.50, down $26.10 or -1.52%.

The dollar index jumped to a more than four-month high as benchmark U.S. Treasury yields rose to a 14-month peak on expectations of stronger growth and inflation ahead of U.S. President Joe Biden’s multi-trillion-dollar infrastructure spending plan.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1676.20 will reaffirm the downtrend. The main trend will change to up on a move through the last swing top at $1756.00.

The nearest resistance is the major Fibonacci level at $1711.90.

The short-term range is $1817.60 to $1676.20. Its retracement zone at $1746.90 to $1763.60 is additional resistance.

The major resistance is the 50% level at $1788.50.

Essentially, the market is trading on the weak side of the long-term retracement zone at $1711.90 to $1788.50.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold market into the close on Tuesday will be determined by trader reaction to $1711.90.

Bearish Scenario

A sustained move under $1711.90 will indicate the presence of sellers. If this move continues to generate enough downside momentum then look for the selling to extend into the main bottom at $1676.20.

The daily chart indicates there is no support under $1676.20 until the minor bottom at $1594.00. This is followed by last year’s low at $1464.20.

Bullish Scenario

A sustained move over $1711.90 will indicate the presence of buyers, probably fueled by short-covering. This could lead to a test of the short-term retracement zone at $1746.90 to $1763.60.