Gold Price Futures (GC) Technical Analysis – Consolidating Inside $1709.10 to $1739.00 Pivot Zone

Gold is edging higher on Friday after hitting its highest level since August 30. The catalyst behind the move is the weaker U.S. Dollar. It fell sharply against a basket of currencies on profit-taking even as U.S. Federal Reserve policymakers vowed to raise interest rates to tame inflation pressures.

At 12:32 GMT, December Comex gold futures are trading $1729.90, up $9.70 or +0.56%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $158.98, down $0.96 or -0.60%.

The dollar is taking a breather from its surging rally on Friday as markets digested yet more hawkish Fed speak, while the Euro held on to parity, helped by a supersized rate hike from the European Central Bank (ECB) on Thursday.

Specifically, Fed Chair Jerome Powell reaffirmed the central bank’s aggressive stance against inflation, which reinforced the greenback’s dominance. However, this news may have been offset by the ECB’s decision to raise its key interest rates by an unprecedented 75 basis points and its promise of further hikes to come in its fight against inflation.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $1699.10 will signal a resumption of the downtrend. A move through $1778.80 will change the main trend to up.

The minor range is $1778.80 to $1699.10. The market is currently testing its pivot at $1739.00.

On the downside, the support is the long-term 50% level at $1709.10. On the upside, the nearest resistance is a pivot at $1760.40. The major resistance is a retracement zone at $1798.50 to $1822.60.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at $1739.00 is likely to determine the direction of the December Comex gold futures contract on Friday.

Bearish Scenario

A sustained move under $1739.00 will indicate the presence of sellers. If this generates enough downside momentum then look for a test of the long-term support at $1709.10.

Taking out $1709.10 will put the market in a position to test three-main bottoms including $1699.10, $1696.10 and the March 30, 2021 main bottom at $1694.50. The latter is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over $1739.00 will signal the presence of buyers. This could trigger an acceleration into the pivot at $1760.40. Since the main trend is down, sellers could come in on a test of this level.