Gold Price Futures (GC) Technical Analysis – May Be Forming Potentially Bullish Secondary Higher Bottom

Gold is trading nearly flat on Tuesday after clawing back earlier losses. The two-sided price action is being fueled by a flip in Treasury yields from higher to lower, a drop in demand for risky assets and a weaker U.S. Dollar, which is making dollar-denominated gold a more attractive investment.

At 09:02 GMT, December Comex gold is trading $1503.90, down $0.50 or -0.03%.

Gold has been in a downtrend since early September, producing a series of lower-tops and lower-bottoms in the process as the odds of an October rate cut by the Federal Reserve dropped to about 20% early last week. The market rebounded last week after a pair of U.S. activity reports came in weaker than expected, and another report showed a slowing jobs market. Furthermore, the chances of a rate cut jumped to 93.5%, before falling back to 70% at Monday’s close.

Today, traders will get the opportunity to react to a report on producer inflation. It showed come in weaker than last month due to lower crude prices. Fed Chairman Jerome Powell is also scheduled to speak at 17:50 GMT.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1525.80 will change the main trend to up. A move through $1465.00 will signal a resumption of the downtrend.

The short-term range is $1465.00 to $1525.80. Its 50% level or pivot at $1495.40 is potential support.

The major support zone is $1489.10 to $1471.00.

On the upside, potential resistance is the 50% level at $1515.60.

Daily Technical Forecast

Based on the early price action and the current price at $1503.90, the direction of the December Comex gold futures contract the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at $1504.20 and the uptrending Gann angle a $1505.00.

Bearish Scenario

A sustained move under $1504.20 will indicate the presence of sellers. This could trigger a retest of the 50% level at $1495.40.

A trade through $1495.40 will indicate the selling is getting stronger with targets the main 50% level at $1489.10, followed by the uptrending Gann angle at $1485.00.

Bullish Scenario

Taking out $1505.00 could trigger a breakout to the upside with $1515.60 the first target, followed by a pair of downtrending Gann angles at $1518.20 and $1523.30.

Side Notes

Today’s turnaround is important because it could mean a secondary higher bottom is forming at $1492.10. Last week’s rally was short-covering, which is normal. The pullback into $1495.40 is what may have attracted real buyers today.