Gold Price Futures (GC) Technical Analysis – Momentum Shift Puts $1798.50 – $1822.60 on Radar

Gold futures are trading higher late in the session on Wednesday, reversing an earlier loss after the U.S. Federal Reserve announced a widely expected rate hike and Fed Chair Powell downplayed concerns over a recession. The market was also boosted by a dip in Treasury yields and a weaker U.S. Dollar.

At 19:33 GMT, December Comex gold futures are trading $1756.00, up $20.30 or +1.17%. The SPDR Gold Shares ETF (GLD) is at $161.69, up $1.65 or +1.03%.

The Fed raised its benchmark overnight rate by 75 basis points as expected, and Fed Chairman Jerome Powell made comments that suggested central bank policymakers could slow the pace of rate increases at some point.

The second straight 75 basis point rate hike from the Fed was broadly in line with what economists were expecting, as the central bank attempts to curb inflation while navigating a backdrop of slowing growth.

The rate hike was likely priced into gold, but comments from Powell that left the door open about the size of the rate move at its next meeting in September were interpreted as dovish, encouraging weak gold short-sellers to cover their positions.

In addition, the Fed Chair said he does not believe the U.S. economy is in a recession, given a “very strong labor market.”

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1755.90 changed the main trend to up. A move through $1727.00 will change the main trend to down.

On the downside, the nearest support is a pair of 50% levels at $1729.60 and $1709.10.

On the upside, the nearest resistance is the short-term retracement zone at $1798.50 to $1822.60.

Daily Swing Chart Technical Forecast

Trader reaction to $1742.60 is likely to determine the direction of the December Comex gold futures contract into the close on Wednesday.

Bullish Scenario

A sustained move over $1742.60 will indicate the presence of buyers. Taking out the intraday high at $1758.20 will indicate the buying is getting stronger. This could lead to a test of the next minor top at $1763.10.

The minor top is a potential trigger point for an acceleration to the upside with $1798.50 to $1822.60 the next major target.

Bearish Scenario

A sustained move under $1742.60 will signal the presence of sellers. This could lead to a retest of the support cluster at $1729.60 – $1727.00.