Gold Price Futures (GC) Technical Analysis – Trade Through $1763.10 Shifts Momentum to Upside

Gold futures closed higher, while posting its first weekly gain in six on Friday. The strong short-covering rally was fueled by a pullback in U.S. Treasury yields and a weaker U.S. Dollar. The plunge in yields bolstered non-yielding bullion’s safe-haven appeal and the drop in the greenback increased foreign demand for the dollar-denominated asset.

On Friday, December Comex gold settled at $1745.30, up $23.10 or +1.32%. The SPDR Gold Shares ETF (GLD) finished at $160.69, up $0.42 or +0.26%.

U.S. Treasury yields took a big hit on Friday as weak economic data and a significant interest rate hike from the European Central Bank fueled concerns about an economic slowdown.

Concerns over the U.S. economic outlook also weighed on investor sentiment after the release of more downbeat economic data.

A preliminary reading on the U.S. PMI Composite output index – which tracks activity across the services and manufacturing sectors – fell to 47.5, indicating contracting economic output. It’s the index’s lowest level in more than two years.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1696.10 will signal a resumption of the downtrend. The main trend will change to up on a move through $1880.00. This is highly unlikely over the near-term, but the market is in a position to change the minor trend to up.

The minor range is $1763.10 to $1696.10. The market closed on the strong side of its pivot at $1729.60, making it support.

The major support is the long-term retracement zone at $1709.10 to $1609.30.

On the upside, the nearest resistance is the retracement zone at $1798.50 to $1822.60.

Short-Term Outlook

Trader reaction to the minor pivot at $1729.60 is likely to determine the direction of the December Comex gold futures contract early Monday.

Bullish Scenario

A sustained move over $1729.60 will indicate the presence of buyers. If this creates enough upside momentum then look for a test of the minor top at $1763.10.

Taking out $1763.10 will change the minor trend to up. If this creates enough upside momentum then look for a surge into the short-term retracement zone at $1798.50 to $1822.60.

Bearish Scenario

A sustained move under $1729.60 will signal the presence of sellers. If this creates enough downside momentum then look for a pullback into the long-term 50% level at $1709.10, followed by the March 30, 2021 main bottom at $1694.50. This is a potential trigger point for an acceleration to the downside.