Gold Price Futures (GC) Technical Analysis – Bullish Over $1711.70, Bearish Under $1705.70

Gold futures are edging higher early Monday after posting its best gain in seven weeks amid a slight pullback in U.S. Treasury yields and the U.S. Dollar. The price action was impressive on Friday as the market moved off its lows as strong early selling pressure threatened to wipe out its weekly gains.

Today’s early follow-through rally suggests investors aren’t too worried about high yields at this time and may be interested in buying the precious metal due to its relative inexpensiveness to other metals. Furthermore, traders took be squaring positions ahead of the Fed’s monetary policy releases on Wednesday.

Traders could also be reacting to a warning from White House Chief Medical Advisor Dr. Anthony Fauci. Dr. Fauci warned state leaders on Sunday that the nation’s battle with the coronavirus is still “not in the end zone,” and urged Americans to adhere to public health measures as Europeans experience new infection spikes.

At 02:09 GMT, April Comex gold is trading $1727.00, up $7.20 or +0.42%.

Whatever the reason for the rally, gold is showing some unusual resiliency given the fact that bond yields are still hovering around a one year high. We saw a lot of short-covering last week as a support base formed. This week, we could see some real buying.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1673.30 will signal a resumption of the downtrend. The main trend will change to up on a move through $1815.20.

The minor trend is also down. A trade through $1738.00 will change the minor trend to up. This will shift momentum to the upside. A trade through $1739.10 will reaffirm the change in the minor trend. A new minor bottom as formed at $1696.60.

The minor range is $1673.30 to $1738.00. Its 50% level at $1705.70 is potential support.

The short-term range is $1815.20 to $1673.30. Its 50% level at $1744.30 is a potential resistance level.

The market is currently trading inside a major retracement zone at $1711.70 to $1787.30. This zone is controlling the longer-term direction of the market.

Daily Swing Chart Technical Forecast

The direction of the April Comex gold futures contract on Monday is likely to be determined by trader reaction to $1711.70 and $1705.70.

Bullish Scenario

A sustained move over $1711.70 will indicate the presence of buyers. If this move creates enough upside momentum then look for buyers to go after $1738.00, $1739.10 and $1744.30. The latter is a potential trigger point for an acceleration to the upside with $1787.30 the next likely target.

Bearish Scenario

A sustained move under $1705.70 will signal the presence of sellers. The first downside target is Friday’s low at $1696.60. If this price fails then look for the selling to possibly extend into the main bottom at $1673.30.