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Gold Price Futures (GC) Technical Analysis – Momentum Shifts to Upside on Trade Through $1564.20

James Hyerczyk

Gold futures closed higher on Friday for no obvious reason other than aggressive speculative buying. Some bullish traders claim they are buying because of political, geopolitical and economic worries. However, we’re not seeing any buying in the safe-haven U.S. Treasurys and Japanese Yen.

Other traders are saying the buying is being fueled by speculators placing bets that an overbought stock market will eventually come crashing down. Still others feel that Phase One of the U.S.-China trade deal is weak and bound to fail.

Nonetheless, the gold market is still facing headwinds due to global equity markets at record levels, an improving Chinese economy and a strengthening U.S. Dollar. Gold also rallied last week despite improving U.S. economic data.

On Friday, February Comex gold settled at $1560.30, up $9.80 or +0.63%.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart; however, momentum is trending lower. A trade through $1536.40 will change the main trend to down. A move through $1613.30 will signal a resumption of the uptrend.

The minor trend is down. This is why the momentum is trending lower. The minor trend will change to up on a move through $1564.20. This will also shift momentum to the upside.

The main range is $1453.10 to $1613.30. Its retracement zone at $1533.20 to $1514.30 is major support.

The short-term range is $1613.30 to $1536.40. Its retracement zone at $1574.90 to $1583.90 is the next potential upside target.

The minor range is $1564.20 to $1536.40. Its 50% level or pivot at $1550.30 is providing some support.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $1560.30, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the minor top at $1564.20.

Bullish Scenario

Taking out $1564.20 and sustaining the move will indicate the presence of buyers. This could create the upside momentum needed to challenge the short-term 50% level at $1574.90.

Sellers could come in on the first test of $1574.90. However, this is also the trigger point for an acceleration into the short-term Fibonacci level at $1583.90.

Bearish Scenario

The inability to overcome or sustain a rally over $1564.20 will signal the presence of sellers. If this move creates enough downside momentum then look for a possible retest of the main bottom at $1536.40 and the main 50% level at $1533.20.

This article was originally posted on FX Empire