June Comex Gold: Short-Term Direction Controlled by $1880.20 Minor Pivot

Gold futures are moving lower early Monday as U.S. Treasury yields moved toward their highest levels since 2018 and the U.S. Dollar edged toward a 20-year high.

Demand for gold is being pressured because higher yields increase the opportunity cost of holding non-yielding bullion and a strong greenback reduces foreign interest for the dollar-denominated precious metal.

At 05:22 GMT, June Comex gold futures are trading $1872.30, down $10.50 or -0.56%. On Friday, the SPDR Gold Shares ETF settled at $175.45, up $0.32 or +0.18%.

Today’s price action indicates gold traders are still reacting to Friday’s strong U.S. Non-Farm Payrolls report. The jobs data basically served as another confirmation the Federal Reserve is going to remain on course to deliver a series of aggressive interest rate hikes in June and July.

In confirmation of this news, Reuters is reporting the U.S. futures markets are pricing a 75% chance of a 75 basis point rate hike at the Fed’s next meeting in June and more than 200 bps of tightening by year’s end. This should be enough to put a long-term cap on gold prices.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1849.70 will signal a resumption of the downtrend. A move through $2003.00 will change the main trend to up.

The minor trend is also down. A trade through $1910.70 will change the minor trend to up. This will shift momentum to the upside. A trade through the next minor top at $1921.30 will reaffirm the shift in direction.

The minor range is $1849.70 to $1910.70. The market is currently trading on the weak side of its pivot at $1880.20, making it resistance.

Providing additional resistance is a short-term Fibonacci level at $1897.70 and a long-term 50% level at $1908.10.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold market early Monday is likely to be determined by trader reaction to the pivot at $1880.20.

Bearish Scenario

A sustained move under $1880.20 will indicate the presence of sellers. If this creates enough downside momentum then look for a quick break into the main bottom at $1849.70.

Taking out $1849.70 will reaffirm the downtrend and could trigger an acceleration into the February 11 bottom at $1824.40. This is the last potential support before a support cluster at $1791.60 to $1783.80.

Bullish Scenario

A sustained move over $1880.20 will signal the return of buyers. This could lead to a quick test of $1897.70, followed by a resistance cluster at $1908.10 to $1910.70.

Don’t get too excited about the upside unless there is a close over $1908.10.