Gold Price Futures (GC) Technical Analysis – Long-Term Bulls May Be Defending $1703.00 – $1694.50 Main Bottoms

Gold futures declined on Wednesday as a firmer U.S. Dollar offset limited support for bullion from expectations the U.S. Federal Reserve may not resort to a super-sized 100-basis-point interest rate hike on July 27.

On Wednesday, December Comex gold settled at $1717.70, down $10.40 or -$0.60%. The SPDR Gold Shares ETF (GLD) finished at $158.40, down $1.14 or -0.71%.

Fed speakers have pushed back the notion of a 100 bp hike, but gold still hasn’t managed to rally much because there are still traders who are using the rate hike narrative to sell rallies.

On Thursday, European Central Bank (ECB) policymakers are scheduled to meet. Traders are expecting a 25 basis point rate hike, but some are calling for a 50 basis point move. Meanwhile, British inflation in June surged to a 40-year peak, bolstering chances of a half-percentage-point Bank of England (BOE) rate hike next month.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the August 9, 2021 main bottom at $1703.00 will reaffirm the downtrend. A move through the March 30, 2021 main bottom at $1694.50 will also reaffirm the downtrend.

A move through $1880.00 will change the main trend to up. This is highly unlikely but due to the prolonged move down in terms of price and time, Thursday’s session will begin with the market inside the window of time for a closing price reversal bottom.

The main support is the long-term retracement zone at $1709.10 to $1609.30.

The minor range is $1763.10 to $1707.80. Its 50% level or pivot at $1735.50 is the nearest resistance.

The short-term range is $1900.80 to $1707.80. If the minor trend changes to up then its retracement zone at $1804.30 to $1827.10 will become the primary upside target.

Short-Term Outlook

Trader reaction to the long-term 50% level at $1709.10 is likely to determine the direction of the December Comex gold futures contract early Thursday.

Bearish Scenario

A sustained move under $1709.10 will indicate the presence of sellers. The first downside target is the long-term main bottom at $1703.00, followed by another long-term main bottom at $1694.50. The latter is a potential trigger point for an acceleration to the downside with the April 1, 2020 main bottom at $1618.00 the next major target.

Bullish Scenario

A sustained move over $1709.10 will signal the presence of buyers. If this creates enough upside momentum, we could see a surge into the minor pivot at $1735.50.

Overtaking $1735.50 will indicate the buying is getting stronger with the main top at $1763.10 the next likely target.