Gold Price Futures (GC) Technical Analysis – Closing Price Reversal Bottom May Be Signaling Momentum Shift

Gold futures rose on Thursday as the U.S. Dollar and bond yields moved lower after the European Central Bank (ECB) announced a bigger than expected 50 basis points interest rate hike. The rebound in prices flipped the market higher after earlier weakness, helping to form a potentially bullish closing price reversal bottom.

On Thursday, August Comex gold settled at $1730.80, down $0.50 or -0.03%. The SPDR Gold Shares ETF (GLD) finished at $160.28, up $2.24 or +1.42%.

ECB Hikes Benchmark Interest Rate

The ECB on Thursday announced its decision to raise interest rates by 50 basis points, marking the first rate hike in over a decade.

“The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting,” the ECB said.

The news underpinned the Euro while putting some pressure on the U.S. Dollar Index. This helped trigger a short-covering rally in dollar-denominated bullion.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, Thursday’s closing price reversal bottom suggests momentum may be getting ready to shift to the upside.

A trade through $1696.10 will negate the chart pattern. While taking out the March 30, 2021 main bottom at $1694.50 will reaffirm the downtrend.

A trade through $1737.30 will confirm the closing price reversal bottom. This won’t change the trend to up, but it could trigger the start of a 2 to 3 day counter-trend rally.

The minor range is $1763.10 to $1696.10. Its pivot was tested on the close at $1729.60.

On the downside, the major long-term support zone is $1709.10 to $1609.30. On the upside, the short-term retracement zone at $1798.50 to $1822.60 is potential resistance.

Short-Term Outlook

Trader reaction to the minor pivot at $1729.60 is likely to determine the direction of the December Comex gold futures contract early Friday.

Bullish Scenario

A sustained move over $1729.60 will indicate the presence of buyers. Taking out $1737.30 will shift momentum to the upside. This could trigger the start of a 2 to 3 rally into the minor top at $1763.10.

Bearish Scenario

A sustained move under $1729.60 will signal the presence of sellers. This could trigger a pullback into the long-term 50% level at $1709.10, followed by the closing price reversal bottom at $1696.10, followed by the March 30, 2021 main bottom at $1694.50.