Gold Price Futures (GC) Technical Analysis – Trend Changes to Up on Trade Through $1290.90

Gold prices finished higher on Friday, just one day after touching a four-month low. The move in gold was impressive, but the precious metal still lost $7.50 or -0.58% for the week. Gold managed to rally despite a surge in U.S. non-farm payrolls in April and a drop in the unemployment rate to its lowest level in 50 years.

On Friday, June Comex gold futures settled at $1281.30, up $9.30 or +0.73%.

Earlier in the week, gold prices fell because the Fed said there was no compelling reason at this time to cut interest rates later in the year. However, on Friday, a modest 0.2% monthly pace of wage growth and a drop in the job participation rate prompted investors to sell the greenback, making dollar-denominated gold a more attractive investment. Furthermore, U.S. non-manufacturing PMI also came in below expectations, perhaps once again raising the odds of a potential rate cut.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1267.30 will signal a resumption of the downtrend. The main trend will change to up on a trade through $1290.90.

Throughout the year, a series of retracement levels has controlled the price swings.

As of Friday’s close at $1281.30, Fibonacci support levels come in at $1277.50 and $1268.90.

Resistance is stacked up at $1285.50, $1289.90 and $1292.50. Taking out $1292.50 could trigger a surge into a key 50% level at $1302.50.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $1281.30, the direction of the June Comex gold futures market on Monday is likely to be determined by trader reaction to the Fibonacci level at $1277.30.

Bullish Scenario

A sustained move over $1277.50 will indicate the presence of aggressive counter-trend buyers. They are going to attempt to change the main trend to up by taking out the main top at $1290.90.

However, standing in the way is a series of retracement levels including a 50% level at $1285.50 and a Fibonacci level at $1289.90. So we’re looking for a labored move.

Once $1290.90 is cleared the buyers should easily take out another 50% level at $1292.50. This is a potential trigger point for an acceleration into a 50% level at $1302.50, followed by a main top at $1314.70.

Bearish Scenario

If the resistance cluster at $1285.50 to $1292.50 proves to be too strong, then sellers will retake control. Taking out $1277.50 will mean the selling is getting stronger. This could trigger a break back into a Fibonacci level at $1268.90, followed by last week’s minor low at $1267.30.

Taking out the minor low with heavy volume could drive the June Comex futures contract into the December 14, 2018 bottom at $1249.00.