Gold Price Futures (GC) Technical Analysis – Hawkish Comments from Powell Could Plunge Prices Below $1600

Gold futures are trading flat shortly before the Fed makes its interest rate announcement at 18:00 GMT. Traders are looking for a 75-basis point rate hike, but the real focus will be on what the Fed has to say about cooling down the pace of the rate hikes beginning in December. Traders will also be trying to interpret the tone of Federal Reserve Chair Jerome Powell’s post-meeting briefing.

At 17:25 GMT, December Comex gold futures are trading $1649.30, down $0.40 or -0.02%. The SPDR Gold Shares ETF (GLD) is trading $153.25, down $0.21 or -0.14%.

Ahead of the rate decision, policy statement and Powell’s comments, traders are split on the odds of a 50 basis point or 75 basis point rate hike in December.

Today’s stronger-than-expected ADP jobs report added to the confusion since it could sway the Fed to keep raising rates aggressively until inflation comes down and the unemployment rate rises.

Essentially it comes down to this, if the Fed leans to the hawkish side by raising rates and shrugging off the need for a pivot at this time, gold prices could plunge below $1600.00.

If the Fed leans to the less-hawkish side and suggests it is willing to slow the pace of rate hikes starting in December then gold price could spike into the $1675.00 to $1700.00 area.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1679.40 will change the main trend to up, while a move through $1633.60 will signal a resumption of the downtrend.

The minor range is $1621.10 to $1679.40. The market is currently straddling its pivot at $1650.30.

On the upside, the first layer of resistance is $1679.90 to $1693.80, followed by $1709.10 to $1722.90.

On the downside, the major support is the long-term Fibonacci level at $1609.30.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at $1650.30 is likely to determine the direction of the December Comex gold futures contract into the close on Wednesday.

Bullish Scenario

A sustained move over $1650.30 will indicate the presence of buyers. This could trigger an acceleration into the resistance cluster at $1679.40 to $1679.90. Taking out this area will change the main trend to up. This could trigger the start of a labored rally into a series of potential resistance levels at $1693.80, $1709.10 and $1722.90.

Bearish Scenario

A sustained move under $1650.30 will signal the presence of sellers. This could trigger a break into the main bottom at $1633.60.

If $1633.60 fails as support then look for the selling to possibly extend into $1621.10, followed by $1618.00 and $1609.30. The latter is a potential trigger point for an acceleration to the downside.