Gold bulls are getting punished for a third session due to the stronger U.S. Dollar, firmer U.S. interest rates and increased demand for higher risk assets. The selling could continue later this morning with the release of the ADP Non-Farm Employment Change report at 1215 GMT.
The report is expected to show the private sector of the economy gained 188K jobs in October. This is below last month’s increase of 230K. Matching or coming in better than expected could be bearish for gold because it will support the Fed’s plan to raise interest rates at a gradual pace, further supporting the stronger dollar.
At 1039 GMT, December Comex Gold is trading $1218.90, down $6.40 or -0.52%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1246.00 will signal a resumption of the uptrend. The main trend will change to down on a trade through $1184.30.
The main range is $1184.30 to $1246.00. Its retracement zone at $1215.30 to $1208.00 is the primary downside target. Since the main trend is up, buyers are likely to show up on a test of this area. They are going to try to produce a secondary higher bottom.
On the upside, the resistance zone is $1222.70 to $1235.80. Additional resistance is a 50% level at $1246.30. This level stopped the rally at $1246.00 last Friday.
Daily Technical Forecast
Based on the early trade, the direction of the December Comex Gold futures contract is likely to be determined by trader reaction to the downtrending Gann angle at $1222.00.
A sustained move under $1222.00 will indicate the presence of sellers. If this move creates enough downside momentum then look for the move to extend to the 50% level at $1215.30. This level is a potential trigger point for an acceleration into the support cluster at $1208.00 to $1207.30. This is the best downside target today. It has to hold or prices could collapse into the next angle at $1195.80. This is the last potential support angle before the $1184.30 main bottom.
Overtaking and sustaining a rally over $1222.00 will signal the presence of buyers. However, buyers are going to have to take out $1222.70 in order to trigger an acceleration to the upside with $1222.70 the next likely upside target.