Gold Price Futures (GC) Technical Analysis – Lower as Rising Rate Hike Expectations Weigh on Demand

Gold futures fell sharply on Thursday, losing ground for the fourth straight session, as rising expectations of sharp interest rate hikes weighed on demand for bullion. The market also closed at its lowest price since February 1.

The leaders of the major central banks recently reaffirmed their resolve to bring down inflation by making aggressive rate hikes despite threats to economic growth. Fed Chair Powell has been particularly hawkish, giving the U.S. Dollar a boost and driving down foreign demand for the dollar-denominated asset.

On Thursday, the August Comex gold futures contract settled at $1807.30, down $10.20 or -0.56%. The SPDR Gold Shares ETF (GLD) finished at $168.46.

In economic news, a report from the Commerce Department showed personal spending edged up by 0.2% in May after climbing by a downwardly revised 0.6% in April. Economists were looking for an increase of 0.5% compared to the 0.9% advance originally reported for the previous month.

Additionally, a report released by the Labor Department showed initial jobless claims slipped to 231,000 in the week-ended June 25. This represented a drop of 2,000 from the previous week’s revised level of 233,000. Economists had expected jobless claims to edge down to 228,000 from the 229,000 originally reported in May.

Short-Term Outlook

Trader Reaction to $1807.30 is likely to determine the direction of the August Comex gold futures contract early Friday.

Bearish Scenario

A sustained move under $1802.50 will signal a resumption of the downtrend. If this move creates enough downside momentum then look for the selling to possibly extend into the next main bottom at $1792.00. A trade through this level will reaffirm the downtrend with the January 28 main bottom at $1787.80 the next key target.

Bullish Scenario

A sustained move over $1802.50 will indicate the presence of counter-trend buyers. If this creates enough upside momentum then look for the short-covering rally to possibly extend into the short-term Fibonacci level at $1826.60.