Gold Price Futures (GC) Technical Analysis – Weakens Under $1776.50, Strengthens Over $1784.50
Gold futures are trading nearly flat early Wednesday, mirroring the price action in the U.S. Dollar against a basket of major currencies. The low volume and volatility indicates a few of the major players are sitting on the sidelines ahead of key decisions by the U.S. Federal Reserve and China’s Evergrande.
At 03:59 GMT, December Comex gold futures are trading $1778.30, up $0.10 or +0.01%.
The Federal Reserve is expected to drop more hints on its future policy path when it releases its monetary policy statement at 18:00 GMT. Policymakers are expected to reveal a timeline for when it will start tapering its bond buying and when it will start raising interest rates.
Meanwhile, Chinese property developer Evergrande has been scrambling to raise funds to pay its many lenders, suppliers and investors. A deadline for the company to make an interest payment to creditors looms this Thursday.
Earlier in the week, fears of contagion tied to Evergrande’s debt problems spooked the financial markets. Additionally, Chinese regulators warned that Evergrande’s insolvency could spark broader risks in the country’s financial system if not stabilized.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of Monday’s closing price reversal bottom and its subsequent confirmation.
A trade through $1810.60 will change the main trend to up. A move through $1742.30 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The minor trend is also down. A trade through the minor bottom at $1742.30 will indicate the selling pressure is getting stronger.
Gold is currently trading inside a long-term retracement zone at $1795.00 to $1716.00.
The minor range is $1810.60 to $1742.30. The market is currently testing its retracement zone at $1776.50 to $1784.50. This is potential resistance.
Another potential resistance area is the retracement zone at $1800.00 to $1828.80.
The short-term range is $1677.90 to $1836.90. Its retracement zone at $1757.40 to $1738.60 is support. It stopped the selling at $1742.30 on Monday.
Daily Swing Chart Technical Forecast
The direction of December Comex gold on Wednesday is likely to be determined by trader reaction to $1776.50 and $1784.50.
A sustained move under $1776.50 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling pressure to possibly extend into the short-term retracement zone at $1757.40 to $1738.60.
If $1738.60 fails then look for further weakness with $1716.00 the next likely target.
A sustained move over $1784.50 will signal the presence of buyers. This could trigger a surge into a pair of 50% levels at $1795.00 to $1800.00. Since the main trend is down, sellers are likely to come in on a test of this area.
Overtaking $1800.00 with strong volume could trigger a move into $1810.60. Taking out this level changes the main trend to up with $1828.80 the next likely target.