Gold Rebounds into $1817.50 on Early Rate Hike Chatter

Gold futures are down late in the session on Tuesday but off its low. The market is being pressured by higher U.S. Treasury yields and a stronger U.S. Dollar. Meanwhile, investors are turning their attention to next week’s Federal Reserve policy meeting for more signals on its rate hike timeline.

At 19:05 GMT, February Comex gold is trading $1814.60, down $1.90 or -0.10%. The SPDR Gold Shares ETF (GLD) is at $169.54, down $0.13 or -0.08%.

Benchmark 10-year U.S. Treasury yields touched a two-year peak, while the dollar hit a six-day high earlier in the session, making gold expensive for overseas buyers.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1833.00 will change the main trend to up. A move through $1781.30 will reaffirm the downtrend.

The minor trend is also down. It changed to down earlier today when sellers took out the minor bottom at $1811.80, shifting momentum back to the downside.

The short-term range is $1881.90 to $1753.00. Its retracement zone at $1817.50 to $1832.70 is resistance. This zone stopped rallies on January 3 and January 14.

The minor range is $1781.30 to $1829.30. Its retracement zone at $1805.30 to $1799.60 is support. It stopped the selling at $1804.70 earlier today. Additional minor support is a pivot at $1793.00.

The major long-term support is $1781.00 to $1757.10. Gold prices could collapse if this area is ever taken out with strong selling volume.

Daily Swing Chart Technical Forecast

The direction into the close on Tuesday is likely to be determined by trader reaction to $1817.50.

Bearish Scenario

A sustained move under $1817.50 will indicate the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor pivot at $1805.30 to $1799.60.

Bullish Scenario

A sustained move over $1817.50 will signal the presence of buyers. If this creates enough upside momentum then look for a possible retest of $1829.30 to $1833.00.

Since the main trend is down, sellers are likely to come in on a test of the resistance cluster. However, overcoming $1833.00 could trigger an acceleration to the upside.

Side Notes

Basically, $1817.50 to $1832.70 is the major resistance and $1781.00 to $1757.10 is the major support. Traders could hold gold in a range between these zones until next Wednesday’s Fed announcements.

If the Fed announces a surprise rate hike then look for heightened volatility. Gold prices could break initially, but then could turnaround and rally. Higher rates will be bearish for gold, but an early rate hike would send a signal that the threat to the economy by rising inflation is worse than previously expected.