Gold Price Futures (GC) Technical Analysis – Trend Down; Set Up for Break into $1489.20 to $1488.90

Gold futures closed lower on Friday and for the week as a surge in demand for risky assets encouraged investors to book profits and play for a break into more favorable price levels. Stocks posted strong gains last week, Treasury yields firmed, and longs liquidated safe-haven positions in the Swiss Franc and Japanese Yen– all signs that risk was on.

On Friday, December Comex gold futures settled at $1515.50, down $10.00 or -0.66%.

The U.S. Labor Department’s monthly jobs report came in mixed, but that didn’t matter anyway to gold traders since the market has already priced in a 25-basis point rate cut by the Fed later in the month. Comments from Fed Chair Jerome Powell also weighed on gold prices. Powell called the jobs report consistent with a quite strong labor market and he added that despite trade uncertainties he did not foresee or expect a U.S. recession.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It turned down on September 5 when sellers took out the last swing bottom at $1525.60.

The main trend will change to up on a trade through $1566.20. A trade through last week’s low at $1510.70 will reaffirm the downtrend.

The minor range is $1488.90 to $1566.20. Its 50% level or pivot at $1527.60 is potential resistance.

The short-term range is $1412.10 to $1566.20. Its retracement zone at $1489.20 to $1471.00 is the next potential downside target.

The main range is $1396.40 to $1566.20. Its retracement zone at $1481.30 to $1461.30 is potentially major support.

Aggressive counter-trend buyers are likely to come in on a test of the $1489.20 to $1461.30 area.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $1515.50, the direction of the December Comex gold futures contract on Monday is likely to be determined by trader reaction to the short-term pivot at $1527.60.

Bearish Scenario

A sustained move under $1527.60 will indicate the presence of sellers. If this creates enough downside momentum then look for a potential break into the short-term 50% level at $1489.20 and the minor bottom at $1488.90. Counter-trend buyers could come in on a test of these levels.

If $1488.90 fails then look for the selling to possibly extend into the short-term Fibonacci level at $1471.00 and the main Fibonacci level at $1461.30.

Bullish Scenario

A sustained move over $1527.60 will signal the return of buyers. This could trigger a rebound rally into a pivot at $1538.50. Sellers could come in on a test of this level. They are going to try to form a secondary lower top.