Gold Price Futures (GC) Technical Analysis – Confirmation of Reversal Bottom Will Shift Momentum to Upside
Gold futures are surging late in the session on Monday after a sudden drop in U.S. Treasury yields sent the U.S. Dollar to its low of the session. Earlier in the session, the market fell to a more than three-and-a-half month low.
At 19:22 GMT, June Comex gold futures are trading $1823.40, up $15.20 or +0.84%. The SPDR Gold Shares ETF (GLD) is at $170.13, up $1.34 or +0.79%.
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10-Year Treasury Yield Falls to Start the Week
The yield on the U.S. 10-year Treasury note fell on Monday to start the new trading week as investors looked ahead to fresh economic data and monitored any clues on the path of monetary policy.
The yield on the benchmark 10-year Treasury note fell 6 basis points to 2.877%. The yield on the 30-year Treasury bond declined 1 basis point to 3.086%.
The drop in Treasury yields reduced the opportunity cost of holding non-yielding gold futures, triggering a short-covering rally. It also caused the U.S. Dollar to weaken, making dollar-denominated gold a more attractive asset to holders of foreign currencies.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, Monday’s intraday chart pattern suggests momentum is shifting to the upside.
A trade through $1785.00 will signal a resumption of the downtrend, while a move through $1910.70 changes the main trend to up.
The minor trend is also down. A trade through $1858.80 will change the minor trend to up. This will shift momentum to the upside.
The minor range is $1910.70 to $1785.00. Its 50% level or pivot at $1847.90 is the nearest upside target.
The main resistance is a pair of retracement levels at $1897.70 and $1908.10.
Daily Swing Chart Technical Forecast
Trader reaction to $1808.20 is likely to determine the direction of the June Comex gold market into the close on Monday.
Bullish Scenario
A sustained move over $1808.20 will indicate the presence of buyers. If this continues to generate enough upside momentum then look for the move to extend into the minor pivot at $1847.90.
Bearish Scenario
A sustained move under $1808.20 will signal the return of sellers. If this creates enough downside momentum then look for a retest of the intraday low at $1785.00, followed by the January 28 bottom at $1783.80.
Side Notes
Following the prolonged move down in terms of price and time, a close over $1808.20 will form a potentially bullish closing price reversal bottom. If confirmed, this could trigger the start of a minimum 2-day counter-trend rally.