Gold Price Futures (GC) Technical Analysis – Inside Move Suggests Investor Indecision Due to Dollar Swings
Gold futures are trading lower early Wednesday after hitting its highest level since October 26 during the previous session. The selling is being fueled by a stronger U.S. Dollar, which is helping to increase foreign demand for the dollar-denominated asset. The greenback is trimming some of its recent losses, but its gains could be capped later in the session if concerns over a Treasury yield inversion re-emerge. This could help underpin gold prices.
At 0716 GMT, February Comex gold is trading $1239.80, down $6.80 or -0.55%.
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Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1247.50 will signal a resumption of the uptrend. The main trend will change to down on a trade through $1216.80.
The minor trend is also up. A trade through $1221.80 will change the minor trend to down. This will also shift momentum to the downside.
On the downside, the first support cluster comes in at $1233.10 to $1232.20. The second support cluster is at $1228.50 to $1227.20. The daily chart opens up to the downside under $1227.20 with the next major target zone $1221.00 to $1213.70.
Daily Swing Chart Technical Forecast
Today’s inside move suggests investor indecision and impending volatility. There are no reference points for a breakout except for the previous day’s high and low.
Bullish Scenario
Taking out $1247.50 will signal a resumption of the uptrend. This is followed by the next main top at $1252.00. It’s going to take a weaker dollar to trigger a breakout over these levels.
Bearish Scenario
Look for gold prices to weaken if the U.S. Dollar continues to rise. Taking out yesterday’s low at $1235.80 will indicate the selling pressure is getting stronger. This will also make $1247.50 a new minor top.
The first target is the support cluster at $1233.10 to $1232.20. Since the main trend is up, look for buyers to show up on the first test of this area. Look for the selling pressure to increase if $1232.20 fails as support with the next target zone coming in at $1228.50 to $1227.20.