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James Hyerczyk
Comex Gold

Gold futures are trading sharply higher at the mid-session on Thursday as the U.S. Dollar spiraled lower on hopes of more coronavirus relief aid and the U.S. Federal Reserve’s pledge to funnel more cash and keep interest rates pinned low.

The price action indicates gold is following a normal pattern where monetary policy stimulus from the Fed provides the long-term support and fiscal stimulus from the government provides the energy for short-term rallies.

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At 16:15 GMT, February Comex gold futures are trading $1893.60, up $24.80 or +1.30%.

Additionally, raising concerns over the U.S. economy’s recovery, the number of Americans filing first-time claims for jobless benefits unexpectedly rose last week as mounting COVID-19 infections battered business operations.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1879.80 changed the main trend to up earlier in the session. A move through $1820.00 will change the main trend to down.

The major support is the long-term retracement zone at $1780.50 to $1705.20. This zone stopped the selling at $1767.20 on November 30.

The short-term range is $1973.30 to $1767.20. Its retracement zone at $1870.30 to $1894.60 is currently being tested. Trader reaction to this zone will determine the near-term direction of the gold market.


Daily Swing Chart Technical Forecast

The direction of the gold market into the close on Thursday will be determined by trader reaction to the short-term Fibonacci level at $1894.60.

Bullish Scenario

A sustained move over $1894.60 will indicate the presence of buyers. Overtaking the minor top at $1904.30 could trigger an acceleration to the upside with $1973.30 the next major upside target.

Bearish Scenario

A sustained move under $1894.60 will signal the presence of sellers. This could trigger a pullback into the 50% level at $1870.30. If it fails then look for the selling to possibly extend into $1861.00. This is the last potential support before the $1820.00 main bottom.

Side Notes

Trader reaction to $1870.30 to $1894.60 will determine the near-term direction of the gold market. Counter-trend sellers are going to try to stop the rally in order to form a secondary lower top, while aggressive trend-traders are going to try to drive the market into $1973.30.

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

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