Gold Price Futures (GC) Technical Analysis – Weak Price Action Leaves Gold Vulnerable on Monday

Gold futures are inching lower for a second straight session, but are still in a position to post nearly a $25.00 gain for the week. For the month, the market is up over $70.00. Driving the price action is expectations of lower global interest rates. Fueling this week’s surge to the upside was a surprise 50-basis point rate cut by the Reserve Bank of New Zealand.

At 20:17 GMT, December Comex gold futures are trading $1509.10, down $0.40 or -0.03%.

Remember that gold doesn’t pay interest, but it becomes a more attractive asset when you have to pay a government to lend it money. Yes, expectations of negative rates are really behind the rally in gold.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1522.70 will signal a resumption of the uptrend. The main trend will change to down on a trade through $1412.10. This is highly unlikely into the close, but there is room for a normal pullback into a short-term retracement zone.

The short-term range is $1412.10 to $1522.70. Its retracement zone at $1467.40 to $1454.30. If there is a sell-off then this zone will become the primary downside target.

Daily Technical Forecast

Given the current price at $1509.10, the direction of the market into the close will be determined by trader reaction to the long-term uptrending Gann angle at $1510.10 and the steep uptrending Gann angle at $1508.10.

A close over $1510.10 will indicate there are still buyers coming in to defend the uptrend. However, this angle moves to $1514.10 on Monday.

The steep Gann angle at $1508.10 is moving up at a rate of $16.00 per day. It will move to $1524.10 on Monday.

Therefore, even if gold closes above $1510.10 on Friday, it could open up under support on Monday, which would put it in a vulnerable position. The daily chart shows there is plenty of room to the downside with the main target a retracement zone at $1467.40 to $1454.30. An uptrending angle at $1460.10 passes through this zone, making it a valid target also.

Overview

The daily chart indicates that gold may have to gap over $1524.10 on Monday to sustain the current upside momentum.