Gold Price Futures (GC) Technical Analysis – Yields Rise on Strong Retail Sales Data, Pressuring Gold Prices

Gold futures are edging higher on Tuesday, helped by a weaker U.S. Dollar, but capped by rising Treasury yields. Well, how can that be? The best explanation is safe-haven buyers drove the dollar beyond its fair value area, meaning it’s overbought and has to come down.

Essentially, the dollar is currently being driven lower by safe-haven liquidation. But Treasury yields are being driven higher by the strong U.S. retail sales report.

At 13:18 GMT, June Comex gold futures are trading $1825.30, up $11.30 or +0.62%. The SPDR Gold Shares ETF (GLD) is at $170.34, up $1.55 or +0.92%.

Just last week, investors were seeking protection in the safe-haven Treasury bonds and the U.S. Dollar in anticipation of a slowdown in the economy caused by the Fed’s aggressive interest rates. Today’s retail sales report shows that the U.S. consumer is still buying despite inflation hovering near a 40-year high.

This supports the Fed’s plans to hike rates by 50 basis points in June and July. That’s bearish for gold. The rate hikes have already been priced into the dollar so now safe-haven longs are bailing on the dollar because the retail sales report is a sign of strength for the economy. That’s helping to underpin gold.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher following the confirmation of Monday’s closing price reversal bottom.

A trade through $1910.70 will change the main trend to up. A move through $1785.00 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor range is $1910.70 to $1785.00. Its 50% level at $1847.90 is the next upside target and potential resistance.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold futures contract into the close on Tuesday will be determined by trader reaction to $1822.90.

Bullish Scenario

A sustained move over $1822.90 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into the pivot at $1847.90.

Bearish Scenario

A sustained move under $1822.90 will signal the presence of sellers. The first downside target is a minor pivot at $1809.90.

Aggressive counter-trend buyers could come in on the first test of $1809.90. They will be trying to form a potentially bullish secondary higher bottom. Taking out this level, however, could trigger an acceleration into the support cluster at $1785.00 – $1783.80.