Gold Price Futures (GC) Technical Analysis – Failure to Hold $1760.40 has Sellers Eyeing $1727.00

Gold futures are edging lower on Monday as traders shrugged off recession talk and a dip in Treasury yields, while continuing to focus on rising U.S. rate hike expectations and the strengthening U.S. Dollar. Technically, the market has entered an area on the daily chart that could trigger a $30 break.

At 08:04 GMT, December Comex gold futures are trading $1749.80, down $13.10 or -0.74%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $162.73, down $1.19 or -0.73%.

The price action suggests that gold investors are dropping the non-yielding asset just like other investments like stocks, bonds, currencies and crypto instruments and redeploying into cash then the U.S. Dollar. This indicates that the dollar is not only getting a boost from rising Treasury yields, but also from its safe-haven appeal.

Additionally, while financial market traders have priced in the probability of a 50-basis-point rate hike at 51.5% and the probability of a 75-basis-point rate hike at 48.5% on the back of hawkish comments from Federal Reserve officials, according to economists in a Reuters poll, the Fed is more likely to raise rates by 50-basis-points due to growing recession worries.

Fortunately for traders, the tie could be broken on Tuesday with the release of the U.S. Flash Services PMI and the Flash Manufacturing PMI or on Thursday with the Preliminary GDP report.

However, for most traders, the focus this week will be on comments by Fed Chair Jerome Powell when he addresses the annual global central banking conference in Jackson Hole, Wyoming on Friday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $1727.00 will change the main trend to down. A move through $1824.60 will signal a resumption of the uptrend.

On the upside, the potential resistance is layered at $1760.40, $1776.20 and $1798.50.

On the downside, the nearest target is the long-term 50% level at $1709.10.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at $1760.40 is likely to determine the direction of the December Comex gold futures contract on Monday.

Bearish Scenario

A sustained move under $1760.40 will indicate the presence of sellers. If this move creates enough downside momentum then look for a steep break into the main bottom at $1727.00.

A trade through $1727.00 will change the main trend to down. This could trigger a further break into the main 50% level at $1709.10, followed by the support cluster at $1696.10 to $1694.50.

Bullish Scenario

Overtaking $1760.40 will signal the return of buyers. This could trigger a labored counter-trend rally into $1776.20. Taking out this level will indicate the short-covering is getting stronger with the short-term resistance zone at $1798.50 to $1822.60 the next target area. This is the last potential resistance before the $1824.60 main top.