June Gold: Sellers Eyeing $1908.10 – $1897.70 Support Zone

Gold futures are trading near their low of day late in the session on Friday as signs of faster policy tightening by the U.S. Federal Reserve lifted Treasury yields and the U.S. Dollar, dampening overall demand for the non-yielding asset. The selling pressure also put the precious metal in a position to post its biggest weekly decline since mid-March.

At 17:55 GMT, June Comex gold futures are trading $1935.70, down $12.50 or -0.64%. The SPDR Gold Shares ETF (GLD) is at $180.28, down $1.78 or -0.98%.

Continuing to set the tone for the weak gold market were the hawkish comments delivered on Thursday by Fed Chair Jerome Powell. The Fed chief said a half-percentage-point interest rate increase “will be on the table” when the U.S. policymakers meet on May 3-4. Bearish gold traders interpreted the comment to mean the Fed may use aggressive actions to tame soaring inflation.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $2003.00 will signal a resumption of the uptrend. A move through $1916.20 will change the main trend to down.

The minor trend is down. This is controlling the momentum.

The market is currently trading inside a long-term retracement zone at $1908.10 to $1958.70. It’s also approaching a near-term retracement zone at $1932.90 to $1897.70.

The two zone combine to form a key support cluster at $1908.10 to $1897.70.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at $1932.90 is likely to determine the direction of the June Comex gold futures contract into the close.

Bullish Scenario

A sustained move over $1932.90 will indicate the presence of buyers. A late session short-covering rally could lead to a test of $1958.70.

Bearish Scenario

A sustained move under $1932.90 will indicate the selling pressure is getting stronger. This could trigger a sharp break into the support cluster at $1908.10 to $1897.70.