June Gold: Last Major Support Zone is $1908.10 – $1897.70

Gold futures are trading at a four-week low early Monday, weighed down by safe-haven demand for the U.S. Dollar and the prospect of an aggressive series of rate hikes by the hawkish Federal Reserve.

Did you notice that I didn’t mention higher Treasury yields? That’s because yields are actually lower overnight.

That’s what happens when risk aversion and demand for safe-haven assets takes place. Professional investors buy U.S. Treasurys, sending yields lower. They also buy the U.S. Dollar and the Japanese Yen. They don’t buy gold.

At 09:30 GMT, June Comex gold is trading $1918.10, down $16.20 or -0.84%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $180.28, down $1.78 or -0.98%. Based on current conditions, it is expected to open lower.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier in the session when sellers took out the last swing bottom at $1916.20. It would have to take out $2003.00 to change the main trend to up.

Gold is currently trading on the bearish side of several retracement levels at $1932.90, $1958.70 and a short-term retracement zone at $1987.60 to $2009.90. All of these levels are potential resistance now that the main trend is down.

The market is also nearing a major support cluster at $1908.10 to $1897.70. This is the last support before a potential acceleration to the downside.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold market on Monday is likely to be determined by trader reaction to the 50% level at $1932.90.

Bearish Scenario

A sustained move under $1932.90 will indicate the presence of sellers. If this move continues to generate enough downside momentum then look for a test of $1908.10 to $1897.70, followed by the main bottom at $1893.20.

We could see a technical bounce on the first test of $1908.10 to $1897.70. We are also anticipating the start of an acceleration to the downside if $1893.20 is taken out with heavy selling pressure.

Bullish Scenario

A sustained move over $1932.90 will signal the return of buyers. Since the trend is down, this buying will take on the form of short-covering. The first upside objective will be $1958.70, the long-term Fibonacci resistance. The only way we can get a little excited about the upside is if the market closes above $1958.70.