Gold Price Futures (GC) Technical Analysis – Trend Down, but Could Begin to Strengthen Over $1711.70

Gold futures are down shortly after the New York opening on Friday, but off their low as traders prepare for the February U.S. Non-Farm Payrolls report, due to be released at 13:30 GMT. The range of the nonfarm estimates for this report is wide, but Dow Jones is forecasting the economy added 210,000 jobs for the month.

With the trend down, I don’t think bearish traders are too worried about the report. They realize the economy has a long way to go before recapturing the 10 million jobs lost during the pandemic. If there is risk, it’s that the report comes in well below expectations or even negative since this would force bond sellers or those betting on a fast recovery and higher inflation to reassess their positions. This would be bullish for gold and could cause a huge short-covering rally.

Blow out numbers to the upside would be bearish for gold on paper, but it all depends on what the Treasury yields do. There are some who still believe the Fed could ramp up its bond buying at its next meeting on March 17 so sellers may not be that aggressive.

At 13:14 GMT, April gold futures are trading at $1693.50, down $7.20 or -0.42%.

Daily Swing Chart Technical Analysis

The main trend is down. A trade through the intraday low at $1683.00 will signal a resumption of the downtrend. The next major downside target is the April 21, 2020 bottom at $1679.60.

The main trend will change to up on a move through 1815.20. This is not likely but due to the prolonged move down in terms of price and time, the market may be ripe for a closing price reversal bottom. This chart pattern won’t change the main trend to up, but it could trigger the start of a 2 to 3 day correction.

The long-term range is $1467.00 to 2107.60. Gold is currently trading on the weak side of its retracement zone at $1711.70 to $1787.30. This zone is controlling the longer-term direction of the market.

The new minor range is $1815.20 to $1683.00. Its 50% level at $1749.10 is today’s key upside target. Since the main trend is down, sellers could come in on the first test of this level. The market will strengthen if they overcome it.

Daily Swing Chart Technical Forecast

The direction of the gold market on Friday will be determined by trader reaction to $1700.70.

Bearish Scenario

A sustained move under $1700.70 will indicate the presence of sellers. If this creates enough downside momentum then look for a break into $1679.60.

Bullish Scenario

A sustained move over $1700.70 will signal the presence of buyers. The first upside target is $1711.70. Overcoming this level could trigger a rally into the pivot at $1749.10. Sellers could come in on the first test, but if buyers can overcome this level then look for the move to extend into the 50% level at $1787.30.

A close over $1700.70 will form a potentially bullish closing price reversal top. If confirmed, this could trigger a minimum 2 to 3 day countertrend rally.