June Gold: Strong Over $1958.70, Weak Under $1932.90

Gold futures are edging lower early Thursday, pressured by a rebound in U.S. Treasury yields and a little strength in the U.S. Dollar.

Benchmark U.S. 10-year Treasury yields inched up after they fell from three-year highs on Wednesday. Higher yields tend to increase the opportunity cost of holding zero-yield bullion, which reduces its attractiveness to investors. The dollar also strengthened after dropping in the previous session, making dollar-denominated gold less attractive to foreign buyers.

At 04:06 GMT, June Comex gold futures are trading $1953.10, down $2.50 or -0.13%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $182.67, up $0.85 or +0.47%.

Attempting to Recover from Tuesday’s Steep Break

On Tuesday, gold prices fell as much as 1.8% as hawkish comments from U.S. central bank officials, including St. Louis Federal Reserve Bank President James Bullard, propelled the dollar and 10-year yields to multiyear highs, Reuters reported.

The yield on 10-year Treasury Inflation-Protected Securities, or real yields, touched two-year highs on Wednesday, briefly rising into positive territory for a second straight day.

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 market is currently trading inside a long-term retracement zone at $1958.70 to $1908.10. Additional support is being provided by the main retracement zone at $1932.90 to $1897.70.

The two retracement zones combine to form a support cluster at $1908.10 to $1897.70.

The short-term range is $2082.00 to $1893.20. Its retracement zone at $1987.60 to $2009.90 is resistance. This zone stopped the buying at $2003.00 on Monday.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold futures contract on Thursday is likely to be determined by trader reaction to $1958.70.

Bearish Scenario

A sustained move under $1958.70 will indicate the presence of sellers. The first downside target is $1932.90. Buyers could come in on the first test of this level, but if it fails then look for the selling to possibly extend into $1908.10 to $1897.70.

Bullish Scenario

A sustained move over $1958.70 will signal the presence of buyers. If this move generates enough upside momentum then look for a surge into the short-term 50% level at $1987.60, followed by the main top at $2003.00 and the short-term Fibonacci level at $2009.90. The latter is a potential trigger point for an acceleration to the upside.