Gold Price Futures (GC) Technical Analysis – Pressured by Rising Expectations of Super-Sized Fed Rate Hike

Gold futures are down for a fourth straight session on Monday, pressured by firm Treasury yields, a strong U.S. Dollar and rising expectations of a super-sized rate hike by the Federal Reserve in early November.

Traders are still reacting to Friday’s robust U.S. jobs report that showed a greater-than-expected jump in payrolls and an unexpected drop in the unemployment rate. The news cemented bets that the Fed would stick to its aggressive rate hike path. Fed fund futures are now pricing in a 90% chance of a 75-basis-point hike.

At 11:30 GMT, December Comex gold futures are trading $1683.40, down $25.90 or -1.52%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $157.92, down $1.71 or -1.07%.

The focus now shifts to U.S. producer and consumer inflation reports due later this week. Another high inflation reading could lead to increased pressure on the Fed to keep on raising its benchmark aggressively.

Headline consumer price inflation is seen slowing a notch to an annual 8.1%, but the core measure is forecast to accelerate to 6.5% from 6.3%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1738.70 will change the main trend to up. A move through $1622.20 will signal a resumption of the downtrend.

On the upside, the nearest resistance is a long-term 50% level at $1709.10, followed by a short-term retracement zone at $1723.40 to $1747.30.

The minor range is $1622.20 to $1738.70. Its retracement zone at $1680.50 to $1666.70 is potential support.

Daily Swing Chart Technical Forecast

Trader reaction to the minor 50% level at $1680.50 is likely to determine the direction of the December Comex gold futures contract on Monday.

Bullish Scenario

A sustained move over $1680.50 will indicate the presence of buyers. If this move creates enough upside momentum then look for a potential surge into the major 50% level at $1709.10.

Bearish Scenario

A sustained move under $1680.50 will signal the presence of sellers. This could trigger a sharp break into the short-term Fibonacci level at $1666.70. This price is a potential trigger point for an acceleration to the downside.

Side Notes

We’re going to be watching gold closely if it tests the retracement zone at $1680.50 to $1666.70.

Aggressive counter-trend buyers could come in on the move in an attempt to form a potentially bullish secondary higher bottom.

Bearish trend traders are going to try to drive gold through the lower or Fibonacci level at $1666.70. This could trigger an acceleration into the support cluster at $1622.20 to $1609.30.