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James Hyerczyk
Comex Gold

Gold futures settled lower last week while posting an inside move. This chart pattern tends to indicate investor indecision and impending volatility. The fundamentals are bearish except for the fact that according to U.S. government data, money managers are now net short gold futures. This has a tendency to lead to counter-trend movement.

Last week, December Comex Gold settled at $1232.70, down $7.70 or -0.62%.

Even with the market net short, it’s going to take a major shift in the fundamentals to chase out the shorts and bring in the buyers. The key bearish fundamentals remain rising U.S. interest rates, a strong U.S. Dollar and increased appetite for risk. Due to the slew of U.S. economic data this week, we could see volatility in the gold market especially if the dollar plunges in reaction to the data or the Fed’s monetary policy statement on Wednesday.

Weekly December Comex Gold

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. The gold market isn’t even close to turning the main trend to up. However, due to the prolonged break in terms of price and time, there is always the possibility of a closing price reversal bottom. If confirmed, this chart pattern could lead to a short-term counter-trend rally.

A trade through $1221.00 will signal a resumption of the downtrend. A trade through $1221.00 then a close over $1232.70 will form the closing price reversal bottom.

The minor trend is also down. A trade through $1278.20 will change the minor trend to up. A move through $1221.00 will signal a resumption of the downtrend. The minor range is $1278.20 to $1221.00. Its retracement zone at $1249.60 to $1256.30 is a potential upside target.

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Weekly Swing Chart Technical Forecast

We’re going to set the weekly pivot this week at last week’s close at $1232.70.

A sustained move over $1232.70 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to make a run at $1249.60 to $1256.30. Since the trend is down, sellers are likely to come in on a test of this zone. Overcoming it will indicate the short-covering is getting stronger with $1278.20 the next target.

A sustained move under $1232.70 will signal the presence of sellers. If downside pressure increases on the move then look for the selling to extend into $1221.00. This price is a potential trigger point for an acceleration to the downside with the next major target coming in at $1162.00.

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