June Gold Trading Sideways Inside Main Retracement Zone

Gold futures are edging higher late Monday after a directionless session as prices rose amid safe-haven demand tied to the fighting in Ukraine. Gains, however, were capped by hawkish comments from U.S. Federal Reserve Chair Jerome Powell.

Although some officials are saying Russia and Ukraine were nearing agreement on “critical” issues, gold rose as demand for riskier assets retreated. Bullish traders are betting that an escalation of the war could drive safe-haven flows to gold.

At 20:31 GMT, June Comex gold futures are trading $1941.00, up $7.10 or +0.37%. The SPDR Gold Shares ETF (GLD) is at $180.65, up $1.35 or +0.75%.

Putting a lid on gold prices were Federal Reserve Chair Jerome Powell’s hawkish comments that sparked bets of more aggressive interest rate hikes.

The U.S. central bank must move “expeditiously” to bring too-high inflation to heel, Powell said in his remarks prepared for delivery to a National Association of Business Economics conference, adding it could use bigger-than-usual interest rate hikes if needed.

Traders now see a 60.7% chance of a 50-basis point rate hike at the Fed’s May meeting, up from about 52% before Powell’s comments. The U.S. central bank last week raised interest rates by 25 bps to 0.25%-0.50%, the first increase since late 2018.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1882.00 will change the main trend to down. A move through $2082.00 will signal a resumption of the uptrend.

The minor trend is also up. A move through $1955.60 will reaffirm the minor trend. A trade through $1900.40 will change the minor trend to down. This will shift momentum.

The long-term trading range is $2122.70 to $1693.40. The market is currently trading inside its retracement zone at $1908.10 to $1958.70.

The main range is $1783.80 to $2082.00. Its retracement zone is $1932.90 to $1897.70.

The short-term range is $2082.00 to $1900.40. Its retracement zone at $1991.20 to $2012.60 is the primary upside target and potential resistance.

Combining the long-term trading range and the main range creates a key support cluster at $1908.10 to $1897.70. This zone stopped the selling at $1900.40 on March 16.

Short-Term Outlook

The short-term direction of the June Comex gold futures contract is likely to be determined by trader reaction to $1897.70 to $1958.70.

Inside this zone is a series of retracement levels at $1908.10, $1921.50 and $1932.90. This explains the choppy, two-sided trade.