Gold Price Futures (GC) Technical Analysis – Strong Downside Momentum Has Traders Targeting $1709.10

Gold futures are edging lower on Monday, weighed down by higher Treasury yields and a stronger U.S. Dollar. The catalysts behind the moves are hawkish comments from Federal Reserve Chair Jerome Powell, who on Friday, signaled continuing with an aggressive monetary policy to tame inflation.

At 06:13 GMT, December Comex gold futures are trading $1734.60, down $15.20 or -0.87%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $161.81, down $1.94 or -1.19%.

In a highly anticipated speech on Friday at the top central bankers’ conference on Friday, Powell said the Federal Reserve will raise rates as high as needed to restrict growth, and would keep them there “for some time” to bring down inflation. He also acknowledged this could bring some pain to households and businesses.

Gold investors reacted in an orderly fashion to Powell’s remarks since he delivered it with clarity and conviction. This was reassuring. Furthermore, it was hawkish enough and in line with the recent comments from other Fed officials.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out the last main bottom at $1740.20. The new main top is $1778.80. A trade through this level will change the main trend to up.

On the upside, the nearest resistance is a pair of 50% levels at $1760.40 and $1776.20. The major resistance remains the retracement zone at $1798.50 to $1822.60.

On the downside, the major support is the long-term 50% level at $1709.10. This is followed by its long-term Fibonacci level at $1609.30.

Daily Swing Chart Technical Forecast

Trader reaction to $1749.80 is likely to determine the direction of the December Comex gold futures contract on Monday.

Bearish Scenario

A sustained move under $1749.80 will indicate the presence of sellers. A move through $1740.20 will reaffirm the downtrend. This could create the downside momentum needed to challenge the next main bottom at $1727.00. This is the last potential support before the long-term 50% level at $1709.10 and the support cluster at $1696.10 to $1694.50.

Bullish Scenario

A sustained move over $1749.80 will signal the presence of buyers. This could lead to a test of the pivot at $1760.40. Since the main trend is down, sellers could come in on the first test of this level. Overcoming it, however, could trigger a surge into the resistance cluster at $1776.20 to $1778.80.