Gold Price Futures (GC) Technical Analysis – Weakens Under $1795.00, Strengthens Over $1800.00

Gold futures are inching higher early Wednesday on relatively light volume. Helping to underpin gold is a weaker U.S. Dollar, but gains are being capped by stronger U.S. Treasury yields.

Despite the headlines mentioning safe-haven buying and delta-variant support, gold prices are being manipulated mostly by U.S. Treasury yields and the U.S. Dollar. Their movement has been dictated by economic reports and Fed speakers.

Today’s early movement is likely being influenced by position-squaring ahead of the release of the Federal Reserve minutes at 18:00 GMT.

At 05:56 GMT, December Comex gold futures are trading $1792.30, up $4.50 or +0.25%.

Investor focus this week has been on the Fed’s latest meeting minutes, as they search for any clues as to when the central bank might start paring back its asset purchases.

The direction of gold into the close on Wednesday will be determined by trader interpretation of the minutes, but only if the Fed clearly signals imminent tapering in September.

If the market interprets an earlier than expected tapering then Treasury yields and the U.S. Dollar will strengthen, putting pressure on dollar-denominated gold.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1837.50 and $1839.00 will change the main trend to up. A move through $1677.90 will signal a resumption of the downtrend.

Gold is currently trading inside a long-term retracement zone at $1795.00 to $1716.00. Over the last 10 sessions, it has tested both sides of the range.

The main range is $1922.00 to $1677.90. Its retracement zone at $1800.00 to $1828.80 is the next potential upside target and resistance area.

The short-term range is $1839.00 to $1677.90. Its retracement zone at $1777.50 to $1758.50 is potential support.

The minor range is $1677.90 to $1797.60. Its retracement zone at $1737.80 to $1723.60 is the primary downside target.

Looking at the chart another way, a resistance cluster comes in at $1795.00 to $1800.00 and a support cluster has formed at $1723.60 to $1716.00.

Daily Swing Chart Technical Forecast

The price action this week suggests the direction of the December Comex gold futures contract will likely be determined by trader reaction to $1795.00 and $1800.00.

Bearish Scenario

A sustained move under $1795.00 will indicate the presence of sellers. This could start a “stair-step” sell-off with the first target a Fibonacci level at $1777.50 and the next target a 50% level at $1758.50.

If $1758.50 fails as support then look for the selling to possibly extend into $1737.80 to $1723.60. Look for aggressive counter-trend buyers to come in on a test of this area. They will be trying to form a potentially bullish secondary higher bottom.

Bullish Scenario

A sustained move over $1800.00 will signal the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the Fibonacci level at $1828.80, followed by the two main tops at $1837.50 and $1839.00.