Gold Price Futures (GC) Technical Analysis – Straddling Short-Term 50% Level at $1757.40 into the Close

Gold futures are trading sharply higher late in the session on Thursday. Short-term traders said an intraday break in the U.S. Dollar and a slight dip in Treasury yields were the catalysts that set up the move. Others said the rally was likely fueled by end of the month and end of the quarter position-squaring. I tend to believe bearish traders let the market rally so they could re-short at better prices. Remember that professional aren’t fond of shorting weakness.

At 18:54 GMT, December Comex gold futures are trading $1757.10, up $34.20 or +1.99%.

On Wednesday, gold closed on its low of the session. When sellers failed to follow-through to the downside early Thursday, shorts decided to bailout and the short-covering rally grew from there. That’s probably the best explanation for the rally. I wouldn’t read into it too much unless the trend changes to up and the market recaptures previous support levels.

We also know that $1716.00 is major Fibonacci support. Counter-trend buyers may have come in to defend this level because if it failed, we’d be looking at sub-$1700 gold prices.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1721.10 will signal a resumption of the downtrend. Taking out $1788.40 will change the main trend to up.

On the downside, support is a pair of Fibonacci levels at $1738.60 and $1716.00.

Gold is currently straddling the short-term 50% level at $1757.40.

On the upside, potential resistance is a series of 50% levels at $1765.90, $1779.00, $1795.00 and $1800.00.

Daily Swing Chart Technical Forecast

The direction of the gold market into the close on Thursday is likely to be determined by trader reaction to $1757.40.

Bullish Scenario

A sustained move over $1757.40 will indicate the presence of buyers. The first upside target is a 50% level at $1765.90. Overtaking this level late in the session could trigger a surge into $1779.00.

Bearish Scenario

A sustained move under $1757.40 will signal the presence of sellers. This could trigger a sharp break into $1738.60.