Gold Price Futures (GC) Technical Analysis – Weak Tone Ahead of ECB Interest Rate Decision

Gold futures are trading lower on Thursday as firm U.S. Treasury yields weighed on bullion’s appeal as an investment. The market is also posting an inside move on below average volume. This suggests investor indecision and impending volatility, while they awaited clarity on interest rate hike plans from the European Central Bank (ECB) later today.

At 10:58 GMT, August Comex gold futures are trading $1851.20, down $5.30 or -0.29%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $172.73, down $0.21 or -0.12%.

Trading volume is also being subdued by general concerns ahead of Friday’s U.S. consumer inflation report and next week’s Federal Reserve monetary policy and interest rate decisions.

The ECB is all but certain to flag an end to its long-running asset purchase program at the end of this month, and promise a rate hike for July, but the size and pace of its tightening are uncertain.

Generally speaking, rate hikes tend to weigh on gold prices, but in this case, the news has been telegraphed for weeks so we could see a counter-intuitive move in gold. Furthermore, worries over a global recession could underpin gold prices and limit losses. Nonetheless, the direction of gold is still being controlled by Treasury yields.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $1878.60 will signal a resumption of the uptrend. A move through $1830.20 will change the main trend to down.

The minor trend is down. This is controlling the momentum.

For nearly two weeks, August Comex gold has been straddling a range of retracement levels at $1835.30, $1844.00 and $1854.80.

The key level to watch is the long-term Fibonacci price at $1844.00.

Daily Swing Chart Technical Forecast

Trader reaction to $1854.80 and $1835.30 is likely to determine the direction of the August Comex gold futures contract on Thursday.

Bullish Scenario

A sustained move over $1854.80 will indicate the presence of buyers. This could trigger an acceleration into the main top at $1878.60, followed by a pair of 50% levels at $1890.00 and $1900.30.

Bearish Scenario

A sustained move under $1835.30 will signal the presence of sellers. A trade through the main bottom at $1830.20 could trigger an acceleration into the value area at $1792.00 – $1787.80.