Gold Price Futures (GC) Technical Analysis – Look for Sellers on Test of $1757.70 – $1776.50 Retracement Zone

The short-covering rally in gold continued on Wednesday as traders adjusted their positions after tame U.S. consumer inflation data eased fears that the Federal Reserve would taper its economic support sooner than expected.

U.S. Treasury yields slipped on the news, reducing the opportunity cost of holding non-interest bearing gold. The U.S. Dollar also fell from its highest in more than four months, driving up demand for the dollar-denominated asset.

On Wednesday, December Comex gold settled at $1753.30, up $21.60 or +1.25%.

July consumer prices jumped 5.4% from a year earlier, and on a monthly basis, the Labor Department reported Wednesday. Core inflation, which excludes petroleum and food prices, rose by 0.3% in July, missing economist expectations of a 0.4% increase and lower than June’s 0.9% increase.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1837.50 will change the main trend to up. A move through $1677.90 will signal a resumption of the downtrend.

The support is a pair of Fibonacci levels at $1716.00 and $1708.00.

The short-term range is $1837.50 to $1677.90. The market closed in a position to challenge its retracement zone at $1757.70 to $1776.50.

Additional resistance is a pair of 50% levels at $1795.00 and $1800.60.

Daily Swing Chart Technical Forecast

Based on Wednesday’s close, the early direction of the December Comex gold futures contract will be determined by trader reaction to $1757.70.

Bearish Scenario

A sustained move under $1757.70 will indicate the presence of sellers. If this move is able to generate enough downside momentum, then look for a pullback into $1716.00 to $1708.00. Basically, there is no support between $1757.70 and $1716.00.

Bullish Scenario

Overtaking $1757.70 will indicate the short-covering is getting stronger. This could trigger an extension of the rally into $1776.50.

Since the main trend is down, look for sellers to return on a test of $1757.70 to $1776.50. Taking out $1776.50 with strong buying could put gold in a position to extend the rally back to $1795.00 to $1800.60.