Gold Price Futures (GC) Technical Analysis – Tumbles as Fed Fails to Give Signal of Further Rate Cuts

Based on the early price action and the current price at $1497.10, the direction of the December Comex gold market into the extended close is likely to be determined by trader reaction to the main 50% level at $1489.10.
James Hyerczyk
Comex Gold

Gold futures posted a wicked two-sided trade late Wednesday before turning lower for the session after the U.S. Federal Reserve decided to cut its benchmark interest rate 25-basis points as expected, remained deeply divided on the need for further easing as the U.S. economy improves.

The Fed took down its benchmark overnight lending rate to a target range of 1.75% to 2.00%. However, according to the Fed’s “dot plot” of individual expectations, five members thought the Federal Open Market Committee (FOMC) should have held its previous range of 2.00% to 2.25%, five approved of the 25 basis point cut but keeping rates there through the rest of the year, and seven favored at least one more cut this year.

The FOMC again cited “the implications of global developments for the economic outlook as well as muted inflation pressures” as the primary rationale for Wednesday’s cut.

At 19:14 GMT, December Comex gold futures are trading $1497.10, down $16.30 or -1.08%.

Daily December Comex Gold

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1566.20 will change the main trend to up. The next main bottom target is $1412.10, but sellers are going to have to take out a key retracement zone before the market gets there.

The short-term range is $1566.20 to $1490.70. Its retracement zone at $1528.50 to $1537.40 is resistance.

The main range is $1412.10 to $1566.20. Its retracement zone at $1489.10 to $1471.00 is the next downside target. Trader reaction to this zone will determine the near-term direction of the market.

Daily Technical Forecast

Based on the early price action and the current price at $1497.10, the direction of the December Comex gold market into the extended close is likely to be determined by trader reaction to the main 50% level at $1489.10.

Bearish Scenario

A sustained move under $1489.10 will indicate the presence of sellers. Crossing to the weak side of the downtrending Gann angle at $1486.20 will indicate the selling is getting stronger with additional targets an uptrending Gann angle at $1478.10, followed by a Fibonacci level at $1471.00.

Bullish Scenario

Holding the main 50% level at $1480.10 will indicate that buyers are coming in to support the market. If this creates enough upside momentum then look for the rally to possibly extend into the uptrending Gann angle at $1506.40. Overcoming this angle will indicate the buying is getting stronger with the next target angle dropping in at $1526.20.

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