Gold Price Futures (GC) Technical Analysis – Threat of Aggressive Fed Tightening Puts $1600 on Radar

Gold futures are lower on Thursday after a volatile trade the previous session. Prices are being pressured by the Federal Reserve’s monetary policy announcement on Wednesday and the subsequent hawkish comments by Fed Chair Jerome Powell in his post-meeting briefing.

The market initially reacted positively to the Fed’s monetary policy statement and 75-basis point rate hike. However, gold retreated after comments from Fed Chair Jerome Powell dampened optimism about the outlook for interest rates.

At 03:05 GMT, December Comex gold futures are trading $1638.70, down $11.30 or -0.68%. On Wednesday, the United States Oil Fund ETF (USO) settled at $74.05, up $0.93 or +1.27%

Powell Delivers Powerful Hawkish Message

“It is very premature to be thinking about pausing,” Powell said in his post-meeting press conference. “People when they hear ‘lags’ think about a pause.

“It is very premature, in my view, to think about or be talking about pausing our rate hikes. We have a ways to go,” he added.

Of course Powell was referring to the pre-meeting chatter that led to speculation the Fed would slowdown the size of its rate hikes starting in December with a 50-basis point rise.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1679.40 will change the main trend to up. A move through $1633.60 will reaffirm the downtrend.

The minor range is $1621.10 to $1679.40. The market is currently trading on the weak side of its pivot at $1650.30, making it resistance.

On the upside, additional resistance comes in at $1679.90 to $1693.80. On the downside, the major support is the long-term Fibonacci level at $1609.30.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at $1650.30 is likely to determine the direction of the December Comex gold futures contract on Thursday.

Bearish Scenario

A sustained move under $1650.30 will indicate the presence of sellers. Taking out the swing bottom at $1633.60 will indicate the selling is getting stronger. This could trigger a move into the near-term bottom at $1621.10, followed by the April 1, 2020 main bottom at $1618.00 and the long-term Fibonacci level at $1609.30. The latter is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over $1650.30 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the resistance cluster at $1679.40 to $1679.90.