Gold Price Futures (GC) Technical Analysis – Failure to Hold $1729.80 Could Lead to Test of $1682.40
Gold futures dipped on Wednesday as investors booked profits after this week’s early price surge to a seven-year high. A stronger U.S. Dollar also led to a drop in demand for dollar-denominated gold. Money flowed into the safe-haven dollar after the U.S. released a pair of bearish economic reports.
Fear of margin call selling also weighed on gold prices as the precious metal continued to move lock-step with U.S. equity markets, which were pressured all session.
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At 19:46 GMT, June Comex gold futures are trading $1745.60, down $23.30 or -1.32%.
Strong Dollar, Bad US Economic Data
Bleak U.S. retail sales figures and a dramatic drop in New York state manufacturing data sent the dollar higher on Wednesday as investors fled risk assets for safe havens. The data underlined growing investor fears that the damage to the global economy from the coronavirus outbreak will be long and protracted.
Short-term traders should be prepared for volatile two-sided trading. Longer-term investors should be watching for a pullback into a value zone for the next buying opportunity. We’re pretty confident with our long-term bullish assessment because of huge amounts of fiscal and monetary stimulus should keep the pressure on the U.S. Dollar.
The problem with the short-term is that gold is not adhering to its normal relationship with the stock market. This means that gold and stocks are following each other, which is not their traditional relationship. Usually, investors want to own hard assets (gold) or paper assets (stocks).
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1788.80 will signal a resumption of the uptrend. The main trend will change to down on a move through the last swing bottom at $1576.00.
The minor trend is also up. A new minor top was formed at $1788.80. A trade through $1670.70 will change the minor trend to down. This will also shift momentum to the downside.
The minor range is $1670.70 to $1788.80. Its 50% level or pivot at $1729.80 provided support on Wednesday.
The short-term range is $1576.00 to $1788.80. Its retracement zone at $1682.40 to $1657.30 is the first value zone. A test of this area is likely to attract buyers.
The intermediate range is $1453.00 to $1788.80. Its retracement zone at $1620.90 to $1581.30 is another value area.
Short-Term Outlook
Based on Wednesday’s price action and the current price at $1745.60, the short-term direction of the gold market is likely to be determined by trader reaction to the pivot at $1729.80.