June Gold Being Propped Up by Crude Oil, Inflation Fears

Gold futures are trading flat on Tuesday, pressured by rising U.S. Treasury yields. However, losses are likely being limited by a slightly lower U.S. Dollar.

Fundamentally, the possibility of bigger interest rate hikes by the Federal Reserve to rein in inflation remain the most bearish factor weighing on prices.

At 10:13 GMT, June Comex gold is trading $1933.20, down $0.80 or -0.04%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $180.35, up $0.85 or +0.47%.

If you consider that gold was trading at $1882.00 on February 24 when Russia invaded Ukraine, then given its current price, the war premium is about $35.00. This also takes into consider the Fed’s 25 basis point rate hike in March.

If you also consider that gold is down about $150.00 from its war premium high, then I really think you have to seriously rethink its appeal as a safe-haven.

In my opinion, gold is being propped up because investors still want to see evidence that the major central banks including the Fed are getting a handle on inflation.

Furthermore, gold is mirroring crude oil. If it can revisit recent highs then gold could pick up some strength. Gold may be moving hand-in-hand with crude oil because traders believe high energy costs are behind the surge in 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 market remains trapped inside a pair of retracement zones at $1908.10 to $1958.70 and $1932.90 to $1897.70.

On the upside, the short-term retracement zone target is $1987.60 to $2009.90.

Daily Swing Chart Technical Forecast

For a sixth straight session, the direction of the June Comex gold futures contract on Tuesday will likely be determined by trader reaction to $1932.90.

Bullish Scenario

A sustained move over $1932.90 will indicate the presence of buyers. If this creates enough upside momentum then look for a labored rally with potential resistance a main top at $1955.00, a Fibonacci level at $1958.70 and another main top at $1972.50.

Buyers will have to take out those three price levels just to get to the important $1987.60 to $2009.90 retracement zone.

Bearish Scenario

A sustained move under $1932.90 will signal the presence of sellers. This could trigger a quick break into a 50% level at $1908.10, a Fibonacci level at $1897.70 and a main bottom at $1893.20.

The main bottom is a potential trigger point for an acceleration to the downside.