Gold Price Futures (GC) Technical Analysis – In Position to Challenge Major Retracement Zone at $1285.70 to $1312.30

Gold futures finished higher on Friday after reaching its best level since June 26. The rally was driven by another drop in U.S. Treasury yields, which made the dollar a less-desirable investment. One catalyst behind the move were rising expectations that the U.S. Federal Reserve will pause its tightening cycle sooner than expected, or risk slowing the U.S. economy with further interest rate hikes.

On Friday, February Comex gold settled at $1283.00, up $1.90 or +0.15%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the July 9 main top at $1284.10. The main trend will change to down on a trade through $1236.50. Taking out $1284.70 will signal a resumption of the uptrend.

A change is trend is highly unlikely, but due to the prolonged move up in terms of price and time, the market is in the window of time for a potentially bearish closing price reversal top. Friday was the ninth session up from the last main bottom on December 14.

On the upside, the major long-term retracement zone at $1285.70 to $1312.30 is the primary upside target. If there is a closing price reversal top, it is likely to begin inside this zone.

The new short-term range is $1236.50 to $1284.70. Its 50% level or pivot at $1260.60 is the first downside target.

The intermediate range is $1216.80 to $1284.70. Its 50% level at $1250.80 is the next target level.

The main range is $1202.40 to $1284.70. Its retracement zone at $1243.60 to $1233.80 is the primary downside target.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and close at $1283.00, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to Friday’s high at $1284.70.

Bullish Scenario

A sustained move over $1284.70 will indicate the presence of buyers. If this can generate enough upside momentum, we could see an acceleration to the upside through the 50% level at $1285.70. The daily chart indicates there is plenty of room to the upside to rally.

Bearish Scenario

A sustained move under $1284.70 will signal the presence of sellers. This could signal the start of a short-term correction with the 50% level at $1260.60 the near-term target.

Closing Price Reversal Scenario

Taking out $1284.70 then turning lower for the session will indicate the selling is greater than the buying at current price levels. A lower close will form a closing price reversal top. If confirmed on Wednesday, this could trigger the start of a 2 to 3 day counter-trend break.