Gold futures edged lower last Thursday in light trading as many of the major players took to the sidelines ahead of Friday’s bank holiday. The catalysts behind the weakness were a stronger U.S. Dollar and a jump in Treasury yields as investors geared up for a series of aggressive interest rate hikes by the U.S. Federal Reserve beginning in May.
Despite the firm dollar and interest rates, the market was still underpinned by demand fueled by the Ukraine crisis and mounting inflation kept bullion on track for a weekly gain.
Daily June Comex Gold
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1985.80 will signal a resumption of the uptrend. A move through $1916.20 will change the main trend to down.
The market closed on the strong side of a long-term Fibonacci level at $1958.70. This is followed by a main 50% level at $1932.90.
The short-term range is $2082.00 to $1893.20. Its retracement zone at $1987.60 to $2009.90 is the next upside target and potential resistance. We could see aggressive counter-trend sellers on the first test of this area. They will be trying to form a potentially bearish secondary lower top. However, buyers will be trying to trigger a breakout over $2009.90.
Daily Swing Chart Technical Forecast
The direction of the June Comex gold futures contract early Monday is likely to be determined by trader reaction to $1987.60.
A sustained move over $1987.60 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $2009.90.
Taking out $2009.90 with strong buying volume could trigger an acceleration to the upside with $2082.00 the next major upside target.
A sustained move under $2009.90 will signal the presence of aggressive counter-trend sellers. This could trigger a break into $1958.70. Taking out this level could trigger an acceleration into another 50% level at $1932.90.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.