Gold Price Futures (GC) Technical Analysis – Sellers Take Breather Near 2-1/2 Year Low

Gold is recovering nicely on Tuesday after hitting its lowest level in more than 2-1/2 years the previous session. A dip in U.S. Treasury yields and a slight pullback in the U.S. Dollar are helping to alleviate some of the downside pressure on the precious metal that is being fueled by expectations for aggressive U.S. Federal Reserve rate hikes.

At 16:00 GMT, December Comex gold futures are trading $1645.90, up $12.50 or +0.77%. The SPDR Gold Shares ETF (GLD) is at $152.46, up $1.23 or +0.81%.

Key Market Moving Events

Treasury yields fell across the board on Tuesday, with the yield on the 2-year and 10-year notes coming off recent highs. That is helping to underpin gold prices, but should in no way be construed as the start of a change in trend.

With last week’s Fed rate hike “old news”, the quiet period for Federal Reserve speaker commentary has been lifted.

On Monday, a number of Fed speakers reiterated that driving down persistent inflation was a top priority. Cleveland Fed president said that “aggressive and pre-emptive action can prevent the worst-case outcomes from actually coming out.”

In economic news on Tuesday, U.S. Durable Goods Orders came in lower than expected, but Consumer Confidence surprisingly jumped to 108.0, better than the 104.0 forecast.

In other news, the Home Price Index (HPI) fell 0.6% and the S&P/CS Composite-20 HPI came in at 16.1%, lower than expected. However, New Home Sales came in at 685K units versus a 500K unit estimate.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1627.70 will signal a resumption of the downtrend. A move through the April 1, 2020 main bottom at $1618.00 will reaffirm the downtrend. Taking out $1746.60 will change the main trend to up.

The minor trend is also down. A trade through $1696.90 will change the minor trend to up. This will shift momentum to the upside.

The minor range is $1696.90 to $1627.70. It 50% level at $1662.30 is the nearest resistance.

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

Daily Swing Chart Technical Forecast

Trader reaction to $1642.50 is likely to determine the direction of the December Comex gold futures contract into the close on Tuesday.

Bullish Scenario

A sustained move over $1642.50 will indicate the buying is getting stronger. This could trigger a late session surge into the pivot at $1662.30.

Bearish Scenario

A sustained move under $1642.50 will signal the presence of sellers. This could lead to a retest of yesterday’s low at $1627.70, followed by the long-term main bottom at $1618.00.

A failure to hold $1618.00 will indicate the selling pressure is getting stronger with the next target the long-term Fibonacci level at $1609.30.