Gold Reaction to $1833.90 Determines Direction into Close

Gold futures are trading lower late Wednesday after the U.S. Federal Reserve indicated it could soon raise interest rates for the first time in more than three years.

In a move that came as little surprise, the Fed’s policymaking group said a quarter-percentage point increase to its benchmark short-term borrowing rate is likely forthcoming. It would be the first increase since December 2018.

At 19:31 GMT, April Comex gold futures are trading $1834.00, down $21.00 or -1.13%. The SPDR Gold Shares ETF (GLD) is at $170.77, down $1.81 or -1.05%.

Traders are now awaiting Fed Chair Jerome Powell’s news conference, which will be parsed for clues on the magnitude and pace of hikes for the year and strategy for shrinking the central bank’s roughly $9 trillion balance sheet.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $1856.70 will signal a resumption of the uptrend. A move through $1783.80 will change the main trend to down.

The minor trend is down. It changed to down on Wednesday when sellers took out $1830.60. This shifted momentum to the downside.

The main range is $1882.50 to $1755.40. The market is currently trading inside its retracement zone at $1819.00 to $1833.90.

The first minor support is $1806.10. This is followed by a major support zone at $1782.50 to $1758.80.

On the upside, the major resistance is $1899.80.

Daily Swing Chart Technical Forecast

The direction of the April Comex gold futures contract into the close on Wednesday is likely to be determined by trader reaction to $1833.90.

Bullish Scenario

A sustained move over $1833.90 will indicate the presence of buyers. The first upside target is $1840.90, followed by $1856.70.

Taking out $1856.70 could trigger an acceleration to the upside with $1882.50 the next major target.

Bearish Scenario

A sustained move under $1833.90 will signal the presence of sellers. The next downside target is $1819.00. Taking out this level could trigger a further break into the support cluster at $1807.20 – $1806.10.

A move through $1806.10 could trigger an acceleration into another support cluster at $1783.80 to $1782.50.