Gold Price Futures (GC) Technical Analysis – Yield Curve Inversion Boosts Gold Prices

Gold futures are trading higher late Tuesday with the move being fueled by a weaker U.S. Dollar and a drop in U.S. Treasury yields as investors start to give up hope that anything positive will come from trade talks between the United States and China.

In the fixed income markets, long-term Treasury rates added to their month-long slide on Tuesday, aggravating a key yield curve inversion and sending the 10-year yield to its lowest level against the 2-year rate since 2007. Stocks also turned lower for the session, erasing earlier gains from Monday, in reaction to the yield curve inversion. The drop in demand for risky assets drove investors into the safe-haven gold market.

At 18:31 GMT, December Comex gold is trading $1551.60, up $14.40 or +0.94%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Monday’s closing price reversal top set up the market for a shift in momentum to the downside, but this chart pattern was never confirmed. A trade through $1565.00 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $1534.80 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 day correction.

The minor trend is also up. A trade through $1488.90 will change the minor trend to down. The will confirm the shift in momentum to down.

The minor range is $1488.90 to $1565.00. Its 50% level or pivot at $1527.00 is support.

The main range is $1412.10 to $1565.00. Its retracement zone at $1488.60 to $1470.50 is major support.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $1550.50, the direction of the December Comex gold market into the late session close on Tuesday is likely to be determined by trader reaction to yesterday’s low at $1534.80.

Bullish Scenario

A sustained move over $1534.80 will indicate the presence of buyers. If this move continues to generate upside momentum then look for a possible test of the closing price reversal top at $1565.00. Taking out this level could trigger an acceleration to the upside.

Bearish Scenario

Taking out $1534.80 will confirm the closing price reversal top. This could trigger a break into the minor pivot at $1527.00. This level is a potential trigger point for an acceleration to the downside with the next major target zone $1488.90 to $1488.60.