Gold futures are inching higher on Monday after recovering earlier losses in a tight, mostly rangebound trade, as hopes of a U.S. fiscal stimulus package being passed this week offset downward pressure from optimism around COVID-19 vaccines roll-outs.
At 06:10 GMT, February Comex gold is trading $1845.10, up $5.10 or +0.28%.
Talks aimed at reaching a fresh coronavirus relief package gathered momentum in the U.S. Congress on Friday after the release of a bleak U.S. jobs report, as a bipartisan group of lawmakers worked to put the finishing touches on a new $908 billion bill.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1973.30 will change the main trend to up. A move through $1767.20 will reaffirm the downtrend.
The minor trend is also down. A trade through $1904.30 will change the minor trend to up. This will also shift momentum to the upside.
The main range is $1973.30 to $1767.20. Its retracement zone at $1870.30 to $1894.60 is the primary upside target. Since the main trend is down, sellers are likely to come in on the first test of this area.
The minor range is $1767.20 to $1852.70. Its retracement zone at $1810.00 to $1799.90 is a potential support area. Aggressive counter-trend buyers could come in on a test of this area in an effort to form a potentially bullish secondary higher bottom.
Another minor range is $1904.30 to $1767.20. The market is currently testing this level. It could determine the direction of the market this week.
The major support zone is the long-term 50% to 61.8% area at $1780.50 to $1705.20. This zone stopped the selling last week at $1767.20.
Daily Swing Chart Technical Forecast
The early price action suggests the direction of the February Comex gold market on Monday is likely to be determined by trader reaction to $1835.80.
A sustained move over $1835.80 will indicate the presence of buyers. The first target is last week’s high at $1852.70. Overcoming this level could trigger a surge into $1870.30 to $1894.60. Look for sellers on the first test of this area. They will be trying to produce a secondary lower top.
A sustained move under $1835.80 will signal the presence of sellers. This could trigger a steep break into $1810.00 to $1799.90. Watch for counter-trend buyers on the first test of this area. If it fails as support then the selling is likely to extend into $1780.50 to $1767.20.