Gold Price Futures (GC) Technical Analysis – Bottom-Pickers Defending Major Support at $1694.50

Gold futures are edging higher on Friday after a successful test of an 18-month low the previous session. Nonetheless, the precious metal faces a third straight weekly loss on expectations the Federal Reserve will continue its aggressive rate-hike stance.

That being said, today’s early price action likely represents position-squaring ahead of today’s key U.S. labor market announcement.

At 08:50 GMT, December Comex gold is trading $1715.20, up $5.90 or +0.35%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $157.88, down $1.39 or -0.87%.

Today’s U.S. Non-Farm Payrolls report, due to be released at 12:30 GMT, will offer a key insight into the likely approach from the Federal Open Market Committee to its next interest rate decision on September 21.

Economists forecast that 318,000 jobs were added to the U.S. economy in August, less than the shock 528,000 added in July according to Dow Jones, while unemployment is expected to remain at 3.5%.

Ahead of the report, the market is pricing in a 74.0% chance of a 75-basis-point rate hike by the Federal Reserve on September 21.

With gold trading sharply lower since last Friday when Federal Reserve Chief Jerome Powell declared war on inflation, it’s going to take a major loss in U.S. jobs to change the trend in gold, but we could build a case for a short-term counter-trend rally if the jobs report comes in weaker than expected.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the March 30, 2021 main bottom at $1694.50 will reaffirm the downtrend. A move through $1778.80 will change the main trend to up.

The major long-term retracement zone support is $1709.10 to $1609.30. The market is currently straddling the upper level of this range.

The minor range is $1778.80 to $1699.10. Its 50% level at $1739.00 is the nearest resistance. Additional resistance comes in at $1760.40.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at $1709.10 is likely to determine the direction of the December Comex gold futures contract on Friday.

Bullish Scenario

A sustained move over $1709.10 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible short-covering surge into the minor pivot at $1739.00. Overcoming this level could generate further short-covering with $1760.40 another potential target.

With the fundamentals decisively bearish, I expect rallies to be sold so gains are likely to be limited.

Bearish Scenario

A sustained move under $1709.10 will signal the presence of sellers. The first downside target is the support cluster at $1696.10 to $1694.50.

Taking out the March 30, 2021 main bottom at $1694.50 could trigger an acceleration to the downside with the April 1, 2020 main bottom at $1618.00 the next major target, followed by the long-term Fibonacci level at $1609.30.