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Holding Above $1958.70 Puts June Gold in Strong Position

By:
James Hyerczyk

The direction of the June Comex gold futures contract early Monday is likely to be determined by trader reaction to $1987.60.

Comex Gold

In this article:

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.

On Thursday, June Comex gold futures settled at $1974.90, down $9.80 or -0.49%.

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.

Bullish Scenario

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.

Bearish Scenario

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.

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About the Author

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.

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