Gold Price Futures (GC) Technical Analysis – Will Losses Continue after Closing Lower for Year?

Gold futures finished lower on Monday as stronger-than-expected U.S. manufacturing data helped dampen concerns over a slowing economy. Although the U.S. Dollar also weakened, most of this pressure was fueled by traders unloading safe-haven purchases. Investors have been moving into the dollar during periods of uncertainty this year with gold losing its luster as a safe-haven asset.

Gold is now trading lower for the year despite a dovish Federal reserve and substantially lower U.S. Treasury yields. Strong demand for riskier assets have stocks breathing on all-time highs. This is also weighing on gold’s appeal as an investment.

At 03:43 GMT, June Comex Gold is trading $1292.30, down $1.90 or -0.13%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1287.50 will signal a resumption of the downtrend. The main trend will change to up on a move through $1330.80.

The market also closed below $1294.20, putting it lower for the year. This move speaks volumes.

On the upside, the major retracement zone is $1299.80 to $1325.90. This zone is controlling the longer-term direction of the gold market.

The major retracement zone target is $1272.70 to $1253.00. We could see some aggressive counter-trend buyers on the initial test of this area.

Daily Swing Chart Technical Forecast

Based on Monday’s price action and the close at $1294.20, the direction of the June Comex Gold futures contract is likely to be determined by trader reaction to $1294.20.

Bullish Scenario

A sustained move over $1294.20 will indicate the return of buyers. If this generates enough upside momentum then look for the rally to possibly extend into the major 50% level at $1299.80. This is a potential trigger point for an acceleration to the upside with $1311.00 the next likely upside target.

Bearish Scenario

A sustained move under $1294.20 will signal the presence of sellers. The next downside target is $1287.50. Taking out this level will produce a new low for the year. This is also a potential trigger point for an acceleration into the next major 50% level at $1272.70.