Gold Price Futures (GC) Technical Analysis – Weak Volume Breakout Continues

This week’s upside momentum in gold is continuing early Thursday after prices spiked higher on Tuesday under extremely thin trading conditions. Gold is currently trading at its highest level since November 5. Traders said on Tuesday a dip in equity markets and weak U.S. data improved demand for bullion in subdued trading ahead of the Christmas holiday.

At 04:22 GMT, February Comex gold is trading $1507.40, up $2.60 or +0.17%.

I’m watching the price action in the Treasurys and the Japanese Yen and don’t see anything that suggests safe-haven buying is driving gold prices higher. One report earlier in the week said stocks were moving higher because of optimism over U.S.-China trade relations. Another report said gold was moving higher because of worries over the trade deal. Go figure.

Hedge funds had been building a bullish position for weeks, Furthermore, the rising rectangular chart pattern was also bullish. I’m not surprised gold is rallying, just amazed at the size of the move given the light volume.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The next upside target is the main top at $1525.20. A trade through $1463.00 will change the main trend to down.

The support is a major retracement zone at $1495.30 to $1477.30.

The main range is $1571.70 to $1453.10. Its retracement zone at $1512.40 to $1526.40 is the next upside target. Profit-takers and aggressive counter-trend sellers could come in on a test of this zone.

Daily Swing Chart Technical Forecast

Based on the early price action on Thursday, it looks as if the main direction of the February Comex gold market will be determined by trader reaction to the 50% level at $1512.40.

Bullish Scenario

Taking out $1512.40 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with potential targets the main top at $1525.20, followed by the Fibonacci level at $1526.40.

Bearish Scenario

The inability to overcome $1512.40 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the 50% level at $1495.30. Since the main trend is up, buyers could come in on the first test of this level.

If $1495.30 fails as support then don’t be surprised by another acceleration to the downside with the Fibonacci level at $1477.30 the next major downside target.