Gold Price Futures (GC) Technical Analysis – Plenty of Room to Downside with $1618.00 Next Target

Gold futures are down early Friday, testing a more than two year low as expectations of aggressive rate hikes by the U.S. Federal Reserve lifted U.S. Treasury yields, while keeping the U.S. Dollar within striking distance of a 24-month high.

At 08:46 GMT, December Comex Gold futures are trading $1666.40, down $10.90 or -0.65%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $154.98, down $2.95 or -1.87%.

75 Basis Point Rate Hike Priced In

Ahead of next week’s Federal Reserve interest rate decision on September 21, U.S. financial market traders are pricing in a 75-basis-point rate after consumer inflation unexpectedly rose in August.

Evidence of a strong economy was seen on Thursday with U.S. retail sales unexpectedly rising in August as lower gasoline prices supported spending, while U.S. jobless claims fell last week. It’s reports like this that have some traders betting the Fed may go as big as one-full percentage point next week.

Later today at 14:00 GMT, Preliminary University of Michigan Consumer Sentiment is expected to come in at 60.0, higher than the previously revised 58.2. Data on Preliminary University of Michigan Inflation Expectations is expected to come in lower than the previously stated 4.8%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at $1661.90 will signal a resumption of the downtrend. A move through $1746.50 will change the main trend to up.

The nearest resistance is the long-term 50% level at $1709.10. The nearest support is the long-term Fibonacci level at $1609.30.

Daily Swing Chart Technical Forecast

Trader reaction to $1677.30 will determine the direction of the December Comex gold futures contract on Friday.

Bearish Scenario

A sustained move under $1677.30 will signal the presence of sellers. If this continues to generate enough downside momentum then look for the sell-off to eventually extend into the April 1, 2020 main bottom at $1618.00, followed by the major Fibonacci level at $1609.30.

Bullish Scenario

A sustained move over $1677.30 will signal the presence of buyers. If this creates enough upside momentum then look for a possible surge into the former main bottom at $1694.50, followed by the long-term 50% level at $1709.10.

Side Notes

A close over $1677.30 will form a closing price reversal bottom. If confirmed, this could trigger the start of a 2 to 3 day counter-trend rally.