Gold Price Futures (GC) Technical Analysis – Counter-Trend Buyers Ready to Challenge $1739.00 Pivot

Gold futures are edging higher on Monday, underpinned by steady U.S. Treasury yields and a weaker U.S. Dollar. With the release of key U.S. consumer inflation data on Tuesday that could influence the size of the Federal Reserve’s next interest rate hike, today’s early price action is likely being driven by short-covering and position-squaring.

At 07:25 GMT, December Comex gold futures are trading $1736.20, up $7.60 or +0.44%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $159.81, up $0.83 or +0.52%.

All Eyes on US Consumer Inflation Report

The U.S. Consumer Price Index (CPI) data, due to be released at 12:30 GMT on Tuesday, is expected to show that August prices rose at an 8.1% pace over the year, compared with an 8.5% print for July.

Core inflation, which excludes energy and food prices, is forecast to have edged up 0.4 percent month-on-month in August, following a reading of 0.3 percent in July.

Rate Hike Expectations Holding Steady

It’s important to note that the price action in gold over the next nine days is likely to be data dependent because Fed members are on lockdown. Fed officials on Friday ended their public comment period ahead of the central bank’s Sept. 20-21 policy meeting, with strong calls for another super-sized rate increase to combat sky-high inflation.

Early Monday, the CME FedWatch Tool is indicating that financial market traders are largely expecting the Fed to lift rates by 75 basis points at this month’s meeting.

Daily Swing Chart Technical Analysis

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

The minor trend is up. This is driving the momentum.

On the downside, the nearest support is a minor 50% level at $1719.80, followed by a long-term 50% level at $1709.10.

On the upside, the nearest resistance is the pivot at $1739.00, followed by the short-term retracement zone at $1761.90 to $1776.70.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at $1739.00 is likely to determine the direction of the December Comex gold futures contract on Monday.

Bullish Scenario

A sustained move over $1739.00 will indicate the presence of buyers. Taking out last week’s high at $1740.50 will indicate the buying is getting stronger. This could trigger an acceleration into the short-term 50% level at $1761.90, followed by the resistance cluster at $1776.70 to $1778.80.

Bearish Scenario

A sustained move under $1739.00 will signal the presence of sellers. If this generates enough downside momentum then look for a break into the minor pivot at $1719.80.

A failure to hold $1719.80 will put the gold market in a position to test of cluster of potential support levels at $1709.01, $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.