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James Hyerczyk
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Comex Gold

Gold futures are trading flat early Thursday, mirroring the price action in the U.S. Dollar Index and the movement in U.S. Treasury yields. Volume is also below average which suggests investors may be sitting on the sidelines as they wait for cues from major central banks as policymakers signaled support for tapering pandemic-era stimulus.

At 07:30 GMT, December Comex gold futures are trading $1792.90, down $0.60 or -0.03%.

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The U.S. Dollar’s strength appears to be the main catalyst putting the pressure on gold prices. The dollar is strengthening because investors are attracted to its safe-have appeal as they continue to worry about the pace of the global recovery. A stronger dollar dampens the investment appeal of dollar-denominated gold.

We’re looking for heightened volatility at 11:45 GMT when the European Central Bank (ECB) is scheduled to release its policy decision. It is expected to take a token step towards unwinding emergency economic aid while still signaling copious support for years to come.

If the ECB decision drives the Euro sharply higher, then the U.S. Dollar Index could weaken. This could underpin gold prices.

At 12:30 GMT, gold traders will get the opportunity to react to the latest U.S. weekly initial claims data and comments from several Federal Reserve policymakers.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $1781.30 will change the main trend to down. A move through $1836.90 will signal a resumption of the uptrend.

The main range is $1922.00 to $1677.90. The market is currently trading on the weak side of its retracement zone at $1800.00 to 1828.80, making it resistance.

The longer-term retracement zone is $1795.00 to $1716.00. Gold is currently trading inside this zone just under the 50% level at $1795.00.

The combination of these two zones creates a price cluster at $1795.00 to $1800.00.

The short-term range is $1677.90 to $1836.90. If the main trend changes to down then look for a break into its retracement zone at $1757.40 to $1738.60. Buyers could come in on a test of this area since it is a value zone.

Additional support is the major Fibonacci level at $1716.00.

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Daily Swing Chart Technical Forecast

The direction of the December Comex gold futures market on Thursday is likely to be determined by trader reaction to the 50% level at $1795.00.

Bearish Scenario

A sustained move under $1795.00 will indicate the presence of sellers. The first downside target is $1781.30.

Taking out $1781.30 will change the main trend to down. A move through $1774.60 will reaffirm the downtrend. This could trigger a break into the potential value zone at $1757.40 to $1738.60. Look for aggressive counter-trend buyers on the first test of this area.

Bullish Scenario

A sustained move over $1795.00 will indicate the presence of buyers. Taking out $1800.00 will indicate the buying is getting stronger. This could trigger a surge into the minor pivot at $1810.00.

Overtaking $1810.00 will indicate the buying is getting stronger. This could trigger a further rally into $1828.80, followed closely by $1836.90 to $1839.00. The latter is a potential trigger point for an acceleration to the upside.

For a look at all of today’s economic events, check out our economic calendar.
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