Gold Price Futures (GC) Technical Analysis – Looking for Test of Major Value Area at $1780.50 to $1705.20
Gold futures tumbled over 4% on Friday as a jump in U.S. Treasury yields hammered the non-interest bearing, non-dividend paying investment. With investors chasing the yield in bonds, gold has become a funding asset.
We should find out gold’s true value on this particular break, which is a good thing. We think it’s going to be rangebound for a while with fiscal and monetary stimulus providing support and firm yields the resistance. So short-term speculators should get used to buying the dips and selling the rallies.
Your capital is at risk
At 21:56 GMT, February Comex gold is trading $1849.20, down $64.40 or -3.37%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, but momentum shifted to the downside on Wednesday with the formation of a closing price reversal top.
The main trend changes to down on a move through $1820.00. A trade through $1962.50 will signal a resumption of the uptrend.
The short-term range is $2099.20 to $1767.20. Its retracement zone at $1933.20 to $1972.40 is resistance. This area stopped the rally at $1962.50 on January 6.
Minor resistance is a 50% level at $1891.30.
Another minor range is $1767.20 to $1962.50. Its retracement zone at $1864.90 to $1841.80 was tested on Friday. The close inside this range suggests some buyers came in to support the market.
The major long-term support is $1780.50 to $1705.20. This area was treated as value the first time it was tested on November 30 when big buyers came in at $1767.20.
Short-term Outlook
The downside momentum is strong enough to make $1780.50 to $1705.20 a reasonable target next week.
We expect long-term buyers to return on a test of this zone, but we don’t think they’re going to come in at $1780.50 to $1767.20 this time. We think they are going to be gunning for stops under $1767.20. Once they’re out of the way then start looking for a buying opportunity.
Like I said before, learn to buy dips and sell rallies as long as gold remains rangebound, but make sure you’re buying inside a major value area.
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