Gold Price Futures (GC) Technical Analysis – Strong Finish, but Needs to Take Out $1352.70 to Sustain Uptrend

Gold futures closed higher on Thursday, supported by expectations of a sooner than expected rate cut by the Federal Reserve following this week’s soft consumer inflation report. Another drop in U.S. Treasury yields also supported the move because it tends to weaken the U.S. Dollar. This often leads to increased foreign demand for the dollar-denominated asset. Gains were likely capped by a rise in U.S. equity prices.

At 20:17 GMT, August Comex gold is trading $1345.60, up 8.80 or +0.66%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1352.70 will signal a resumption of the uptrend. The next target is the February 20 main top at $1361.50.

The main trend will change to down on a trade through $1323.60. Taking out this level could drive the market into retracement zone support.

The short-term range is $1352.70 to $1323.60. Its retracement zone at $1341.60 to $1338.20 is support.

The main range is $1274.60 to $1352.70. If the trend changes to down then look for the selling to continue into its retracement zone at $1313.70 to $1304.40.

The major retracement zone is $1332.60 to $1307.70. This zone is controlling the longer-term direction of the gold market.

Daily Swing Chart Technical Forecast

Based on the current price at $1345.60, the early direction of the gold market on Friday is likely to be determined by trader reaction to the short-term retracement zone at $1341.60 to $1338.20.

Bullish Scenario

A sustained move over $1341.60 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to challenge $1352.70. Taking out this level will reaffirm the uptrend. This could trigger a further rally into the next main top at $1361.50.

Bearish Scenario

Taking out $1341.60 will be the first sign of weakness, but don’t expect to see an acceleration to the downside unless sellers can drive the market through $1338.20. If this level fails then look for the selling to extend into the major Fibonacci level at $1332.60.

Crossing to the weak side of $1332.60 will indicate the selling is getting stronger. This could lead to a test of the main bottom at $1323.60.

If $1323.60 fails as support then the trend will change to down. This could trigger a break into a series of retracement levels at $1313.70, $1307.70 and $1304.40.