Gold Price Futures (GC) Technical Analysis – Uptrending Gann Angle at $1660.00 Controlling Direction

Gold futures are trading higher after posting a volatile, two-sided trade earlier in the session. Shortly after the opening, gold prices rose above the $1,700 per ounce level on Monday for the first time in more than seven years.

The catalysts behind the rally was a steep break in global equity markets and another plunge in U.S. Treasury yields due to concerns over a widening coronavirus outbreak and its impact on the global economy.

At 07:25 GMT, April Comex gold is trading $1680.50, up $8.10 or +0.48%.

Early in the session, gold surged to $1704.30, but sellers came in as the stock market sell-off raised fears that gold could be hit by margin-call selling like it was two weeks ago. Since that initial break from the top, the buying has been tentative.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on the opening when buyers took out the previous main top at $1691.70. A move through the intraday high at $1704.30 will indicate a resumption of the uptrend.

The main trend will change to down on a move through $1564.00. This is highly unlikely, but due to the prolonged move up in terms of price and time, the market is vulnerable to a closing price reversal top. This won’t change the trend to down, but it could lead to a 2 to 3 day counter-trend break.

Daily Technical Forecast

Based on the early price action and the current price at $1680.50, the direction of the April Comex gold futures contract the rest of the session on Monday is likely to be determined by trader reaction to Friday’s close at $1672.40.

Bullish Scenario

A sustained move over $1672.40 will indicate the presence of buyers. If this move is able to create enough upside momentum then look for a retest of the intraday high at $1704.30. This is a potential trigger point for an acceleration into our first upside objective of $1729.50.

Bearish Scenario

A sustained move under $1672.40 will signal the presence of sellers. The first downside target is the steep uptrending Gann angle at $1660.00. This angle provided support earlier in the session with the actual intraday low coming in at $1658.00.

The angle at $1660.00 is a potential trigger point for an acceleration to the downside with the next target angle coming in at $1612.00.

Side Notes

The early price action suggests traders are nervous about buying gold at current levels, given the weakness in the stock market. Gold could form a potentially bearish closing price reversal top if sellers continue to pound the stock market into the close. Stock traders could sell gold like they did two weeks ago in order to raise cash to meet margin calls.

A rapid turnaround in U.S. Treasury yields and a rally in the U.S. Dollar could also put pressure on gold prices.