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Gold Price Futures (GC) Technical Analysis – Main Trend Changes to Up on Trade Through $1875.00

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Gold futures rose on Friday, while closing higher for a second consecutive week, underpinned by a dip in U.S. Treasury yields and a pullback in the U.S. Dollar. The catalyst behind the market’s strength was the easing of fears of aggressive policy tightening by the Federal Reserve.

On Friday, August Comex gold futures settled at $1857.30, up $3.40 or +0.18%. The SPDR Gold Shares ETF (GLD) finished at $172.88, up $0.12 or +0.07%.

Benchmark 10-year note yields were down on the day, after briefly rising on strong spending data, while the dollar was headed for a second consecutive week of declines.

The price action in gold suggests traders are easing concerns about Fed interest rate hikes. This notion is supported by data showing a slowdown in the pace of consumer price growth in the month of April and an increase in consumer spending for the same time period.

The increase in inflation slowed, which could underpin economic growth in the second quarter amid rising fears of a recession, and U.S. consumer spending rose more than expected in April as households boosted purchases of goods and services.

Daily August Comex Gold
Daily August Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $1875.00 will change the main trend to up. A move through $1792.00 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through $1842.50 will change the minor trend to down.

The first support is a minor pivot at $1854.80. The major support is the long-term Fibonacci level at $1844.00. A third potential support level is another minor pivot at $1833.50.

On the upside, the nearest resistance is a pair of 50% levels at $1890.00 and $1900.30.

Short-Term Outlook

Trader reaction to the pivot at $1854.80 will determine the direction of the August Comex gold futures market early Monday.

Bullish Scenario

A sustained move over $1854.80 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the main top at $1875.00.

Taking out $1875.00 will change the main trend to up and could trigger an extension of the rally into $1890.00 to $1900.30.

Bearish Scenario

A sustained move under $1854.80 will signal the presence of sellers. Crossing to the weak side of the long-term Fibonacci level at $1844.00 will indicate the selling pressure is getting stronger. This could lead to a quick test of another pivot at $1833.50.

Look for a potential acceleration to the downside if $1833.50 fails to hold. The daily chart shows the nearest support at $1811.70, followed by $1792.00.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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