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James Hyerczyk
Comex Gold

Gold futures lower on Friday and for the week as rising Treasury yields and increased demand for risky assets encouraged investors to book profits. The biggest factor weighing on dollar-denominated gold was the upside spike in the U.S. Dollar. This move reduced gold’s appeal to foreign investors. The greenback was primarily supported by a plunge in the Euro as investors prepared for aggressive stimulus measures from the European Central Bank later in September. U.S. investors pulling money out of foreign investments also helped boost the dollar.

On Friday, December Comex gold settled at $1529.40, down $7.50 or -0.49%.

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Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up, but momentum shifted to the upside with the formation of the closing price reversal top on August 26 at $1565.00 and the subsequent confirmation of the chart pattern on August 29.

A trade through $1565.00 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will actually change to down on a move through $1412.10.

The minor trend is also up. A trade through $1488.90 will change the minor trend to down. This will also confirm the shift in momentum to down.

The minor range is $1488.90 to $1565.00. Its 50% level or pivot at $1527.00 is controlling the short-term direction of the market.

The main range is $1412.10 to $1565.00. If the downside momentum continues through $1527.00 then look for an eventual break into its retracement zone at $1488.60 to $1470.50.


Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $1529.40, the direction of the December Comex gold futures contract on Tuesday when trading resumes after the U.S. bank holiday is likely to be determined by trader reaction to the pivot at $1527.00.

Bullish Scenario

A sustained move over $1527.00 will indicate the presence of buyers. If this move can generate enough upside momentum then we may see an eventual retest of $1565.00. However, if the market is getting ready to turn lower, then a short-term rally may stall around $1545.30.

Bearish Scenario

A sustained move under $1527.00 will signal the presence of sellers. The daily chart is wide open to the downside under this level with the next target the minor bottom at $1488.90 and the retracement zone at $1488.60 to $1470.50. This area may be viewed as a value zone.

Since the main trend is up, buyers may come in on a test of the value zone. The price action after the highs at $1546.10 on August 13 and $1565.00 on August 26 suggest investors are having a hard time buying strength and may be looking for value.

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