Based on the early price action, the direction of the December Comex gold futures market is likely to be determined by trader reaction to $1917.40.
Gold futures are up over 1% on Friday due to a weaker U.S. Dollar and was headed for a second straight weekly gain, with the metal’s appeal as an inflation hedge bolstered by renewed optimism over a new U.S. coronavirus relief package.
At 08:12 GMT, December Comex gold is trading $1919.00, up $23.90 or +1.26%.
Negotiations resumed between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over the coronavirus aid plan. Additionally, a widening lead for Democratic presidential candidate Joe Biden was also seen as opening the way for big economic stimulus.
The main trend is down according to the daily swing chart. A trade through $1927.00 will change the main trend to up. A move through $1877.10 will signal a resumption of the downtrend.
On the downside, the support is a minor 50% level at $1902.10, a main 50% level at $1889.70 and a Fibonacci level at $1880.00.
The minor range is $1983.80 to $1851.00. Gold is currently testing its 50% level at $1917.40. This level will likely control the direction of the market today.
The short-term range is $2089.20 to $1851.00. Its retracement zone at $1970.10 to $1998.20 is the primary upside target.
Based on the early price action, the direction of the December Comex gold futures market on Friday is likely to be determined by trader reaction to $1917.40.
A sustained move over $1917.40 will indicate the presence of buyers. The next target is the main top at $1927.00. Taking out this level will change the main trend to up. This could trigger an acceleration to the upside with the next target zone $1970.10 to $1998.20. Inside this zone is the main top at $1983.80, making it a valid upside target also.
A sustained move under $1917.40 will signal the presence of sellers. This could lead to a labored break with potential downside targets coming in at $1902.10, $1889.70, $1880.00 and a main bottom at $1877.10. The latter is a potential trigger point for an acceleration to the downside.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.