December Comex Gold futures are trading sharply lower. The market is being driven lower because of increased demand for higher risk assets. Both the U.S. Dollar and U.S. equity markets surged early in the session after the FBI ended its investigation of Hillary Clinton’s emails, reducing the chances for a win by Donald Trump in the U.S. Presidential election.
Last week, gold rose as portfolio managers bought the precious metal as a hedge against financial market turmoil that was expected to follow a win by Trump. Today, they are getting out of their shorts, leading to the price decline.
The main trend is up according to the daily swing chart. However, the two day break from last week’s high has shifted momentum to the downside. A trade through $1309.30 will signal a resumption of the uptrend. A move through $1260.10 will turn the main trend to down.
The main retracement zone is $1295.50 to $1307.80. This zone stopped the rally last week at $1309.30. It is resistance today. Breaking under the 50% level at $1295.50 also means momentum has shifted to down.
The short-term range is $1260.10 to $1309.30. Its retracement zone at $1284.70 to $1278.90 is the first downside target. The 50% level of this range at $1284.70 was tested earlier today.
The next range is $1243.20 to $1309.30. Its retracement zone target is $1276.30 to $1268.50.
The combination of the two retracement zones makes $1278.90 to $1276.30 the best downside target.
Based on the current price at $1288.20 and the earlier price action, the direction of the gold market today is likely to be determined by trader reaction to $1284.70.
A sustained move over $1284.70 will signal the presence of buyers. The first upside target is a resistance cluster at $1295.50 to $1297.30.
A sustained move under $1284.70 will indicate the presence of sellers with the next target an uptrending angle at $1280.10. This is followed closely by a Fibonacci level at $1278.90 and the 50% level at $1276.30.
The daily chart opens up to the downside under $1276.30 with the next target angle coming in at $1270.10.
Watch the price action and read the order flow at $1284.70 today. Trader reaction to this level will determine the direction of the market the rest of the session.