Gold Price Futures (GC) Technical Analysis – Will Hawkish Fed Finally Drive Market Through Support Layers?

Gold futures finished lower for a second session on Tuesday, and if you count last Friday’s steep break from $1520.90, the market has fallen about $30 in three trading sessions. Hopes for a U.S.-China trade deal continued to boost risk sentiment, while weighing on demand for safe-haven gold. However, traders are also being cautious ahead of the U.S. Federal Reserve’s monetary policy and interest rate decisions on Wednesday.

On Tuesday, December Comex gold settled at $1489.90, down $5.90 or -0.39%.

Daily Swing Chart Analysis

The main trend is down according to the daily swing chart. A trade through $1478.00 will signal a resumption of the downtrend after 12 days of sideways activity. A trade through $1465.00 reaffirms the downtrend. The main trend will change to up on a move through $1522.30.

The main range is $1396.40 to $1566.20. Its retracement zone at $1481.30 to $1461.30 is the area controlling the direction of the market.

The intermediate range is $1412.10 to $1566.20. Its support zone at $1489.20 to $1471.00 is additional support.

Combining the two zone creates a key 50% cluster at $1489.20 to $1481.30. This zone has been providing the best support the past two weeks.

The short-term range is $1566.20 to $1465.00. Its retracement zone at $1515.60 to $1527.50 is resistance. This zone stopped rallies at $1525.80, $1522.30 and $1520.90.

Daily Swing Chart Technical Forecast

Based on the price action this week and the close at $1489.90, the direction of the December Comex gold futures contract on Wednesday will likely be determined by trader reaction to the 50% level at $1489.20.

Bullish Scenario

A sustained move over $1489.20 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the short-term retracement zone at $1515.60 to $1527.50. This is likely to occur if the Fed is extremely dovish.

Bearish Scenario

A sustained move under $1489.20 will signal the presence of sellers. This could lead to a stair-step sell-off because of the potential support levels lined up at $1489.20, $1481.30, $1471.00 and $1461.30.

The true trigger point for an acceleration to the downside is the major Fibonacci level at $1461.30. An extremely hawkish Fed will take the market there.