June Comex Gold Trapped Inside Long-Term Retracement Zone

Gold futures are edging higher on Thursday, underpinned by a pullback in Treasury yields and the U.S. Dollar. Volume is on the light side. The market is also straddling a key 50% level for the seventh straight day, while trading inside a pair of retracement zones for nearly a month. This type of price action suggests impending volatility.

At 12:21 GMT, June Comex gold futures are trading $1933.70, up $10.60 or +0.55%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $179.63, up $0.39 or +0.22%.

The price action also suggests that yesterday’s Fed minutes contained no real surprises and that gold traders may actually be relieved that they know the central bank’s intentions going forward.

Minutes of the Fed’s March 15-16 meeting showed policymakers rallying around plans to cut the central bank’s massive balance sheet as soon as next month.

The minutes also revealed that Fed officials “generally agreed” to cut up to $95 billion a month from the central bank’s asset holdings as another tool in the fight against surging inflation, even as the war in Ukraine tempered the first U.S. interest rate increase.

Gold traders seem to be propping up prices while they wait for real evidence that the Fed aggressive interest rate moves are actually starting to tame inflation.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1955.00 will change the main trend to up. A move through $1893.20 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $1948.90 will change the minor trend to up. This will shift momentum to the downside. A move through $1916.20 will indicate the selling pressure is getting stronger.

Gold continues to trade inside a pair of retracement levels at $1897.70 to $1958.70 and $1908.10 to $1932.90.

If the main trend changes to up then the short-term retracement zone at $1987.60 to $2009.90 will become the primary upside target.

Daily Swing Chart Technical Forecast

The direction the June Comex gold futures contract on Thursday is likely to be determined by trader reaction to $1932.90.

Bullish Scenario

A sustained move over $1932.90 will indicate the presence of buyers. This could lead to a labored rally with potential resistance levels a minor top at $1948.90, a main top at $1955.00 and a Fibonacci level at $1958.70.

Overtaking $1958.70 will indicate the buying is getting stronger with the main top at $1972.50 the next target. This is followed by the short-term retracement zone at $1987.60 to $2009.90. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $1932.90 will signal the presence of sellers. Taking out the minor bottom at $1916.20 will likely lead to a test of the support cluster at $1908.10 to $1897.70, followed by the main bottom at $1893.20.

The selling pressure could start to intensify under $1893.20 with a test of $1882.00 likely. This is a potential trigger point for an acceleration to the downside.