Gold Price Futures (GC) Technical Analysis – Reaction to Retracement Zone at $1798.50 – $1822.60 Sets Tone

Gold futures are edging higher at the mid-session on Tuesday, supported by a weaker U.S. Dollar, but capped by a rise in Treasury yields as traders awaited tomorrow’s major U.S. consumer inflation report that could further boost the chances of a supersized rate hike on September 21.

At 15:47 GMT, December Comex gold futures are trading $1811.30, up $6.10 or +0.34%. The SPDR Gold Shares ETF (GLD) is at $167.30, up $0.61 or +0.37%.

The U.S. Consumer Price Index (CPI) report for July is due at 12:30 GMT on Wednesday. Analysts polled by Reuters expect annual inflation to have eased to 8.7% from 9.1% in June. More importantly, Core CPI is expected to come in at 6.1%, up from 5.9%.

A lower-than-forecast inflation number, especially Core, could drive gold prices higher, while a stronger number will drive up the odds of a supersized 75 basis-point rate hike, putting pressure on bullion.

In other news, a New York Federal Reserve survey showed on Monday that U.S. consumers’ expectations for where inflation will be in a year and three years dropped sharply in July. This suggests we can’t write off a dip in both headline and core inflation.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at $1817.00 will reaffirm the uptrend. A move through $1696.10 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, the market is vulnerable to a closing price reversal top.

The minor trend is also up. A trade through $1770.00 will change the minor trend to down. This will shift momentum to the downside.

The main range is $1900.80 to $1696.10. The market is currently testing its retracement zone at $1798.50 to $1822.60.

The minor range is $1727.00 to $1817.00. Its 50% level at $1772.00 is the nearest support.

Daily Swing Chart Technical Forecast

Trader reaction to $1805.20 is likely to determine the direction of the December Comex gold futures contract into the close on Tuesday.

Bullish Scenario

A sustained move over $1805.20 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the main Fibonacci level at $1822.60. This price is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $1805.20 will signal the presence of sellers. The first downside target is the main 50% level at $1798.50. This is a potential trigger point for an acceleration to the downside with the support cluster at $1772.00 – $1770.00 the next target.