Gold Price Futures (GC) Technical Analysis – Weak as Investors Brace for Long Period of High Interest Rates

Gold prices are under pressure late in the session on Tuesday as traders continue to brace for a long period of high interest rates in the United States and around the world.

After Fed Chair Powell on Friday signaled the need for a more aggressive central bank, gold has been under pressure. The problems are rising rates mean lower demand for non-interest bearish gold and a stronger U.S. Dollar means a drop in demand from holders of foreign currencies.

At 18:00 GMT, December Comex gold futures are trading $1737.10, down $12.60 or -0.72%. The SPDR Gold Shares ETF (GLD) is at $160.53, down $1.33 or -0.82%.

U.S. economic data also weighed on gold prices today. U.S. job openings increased in July and data for the prior month was revised sharply higher, pointing to persistently strong demand for labor that is giving the Federal Reserve the greenlight to maintain its aggressive interest rate increases.

Hawkish comments from a Fed official also supported higher yields. The latest remarks came from New York Fed President John Williams on Tuesday. “I do think with demand far exceeding supply, we do need to get real interest rates…above zero. We need to have somewhat restrictive policy to slow demand, and we’re not there yet,” Williams told the Wall Street Journal.  “We’re still quite a ways from that,’ he added.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the main bottom at $1727.00 will reaffirm the downtrend. A trade through the main bottom at $1778.80 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. On the downside, the nearest support is a long-term 50% level at $1709.10.

Short-Term Outlook

Trader reaction to $1749.70 will determine the direction of the December Comex gold futures contract into the close on Tuesday.

Bearish Scenario

A sustained move under $1749.70 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling pressure to possibly extend into the main bottom at $1727.00.

Taking out this level will reaffirm the downtrend with $1709.10 the next major target. If this level fails then look for the selling to continue into the support cluster at $1696.10 to $1694.50. The latter is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over $1749.70 will signal the presence of buyers. This could lead to a labored rally with potential targets the 50% level at $1760.40 and the resistance cluster at $1776.20 to $1778.80.