Gold futures jumped nearly 2% to a near one-week high on Monday, as expectations for rising inflation triggered equity valuation concerns, fueling a short-covering rally in the precious metal. Meanwhile, another dip in the U.S. Dollar against a basket of major currencies lent further support.
Rising real yields and inflation concerns made equity valuations look more stretched in comparison and pushed investors toward non-interest bearing assets like gold, which is widely viewed as a hedge against inflation.
At 20:45 GMT, April Comex gold is trading $1808.60, up $31.20 or +1.76%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1856.60 will change the main trend to up. A move through $1759.00 will signal a resumption of the downtrend.
The major support is a long-term retracement zone at $1787.30 to $1711.70. This zone stopped the selling at $1759.00 on Friday.
The minor range is $1856.60 to $1759.00. At the close, gold is straddling its 50% level at $1807.80.
The short-term range is $1878.90 to $1759.00. Its retracement zone at $1819.00 to $1833.10 is the next likely upside target.
The main range is $1966.80 to $1759.00. If the trend changes to up then look for the rally to possibly extend into its retracement zone at $1862.90 to $1887.40.
Daily Swing Chart Technical Forecast
The direction of the April Comex gold market into the close is likely to be determined by trader reaction to the pivot at $1807.80.
A sustained move over $1807.80 will indicate the presence of buyers. This could trigger a move into $1819.00 to $1833.10. Since the main trend is down, look for sellers on the first test of this area.
Overcoming $1833.10 could trigger a surge into $1856.60 to $1862.90.
A sustained move under $1807.80 will signal the presence of sellers. This could trigger a steep break into the major 50% level at $1787.30. If this fails then look for a possible retest of the main bottom at $1759.00.