Gold futures spiked higher on Friday, helping the market solidify a strong weekly gain. The market was primarily supported by a weaker U.S. Dollar. The greenback’s weakness was driven by a surge in the Euro and somewhat dovish comments from a high-ranking U.S. Federal Reserve official.
The Euro may have been underpinned by hopes that Italian Prime Minister Giuseppe Conte was looking to work with the EU over his government’s 2019 budget, which was rejected by Brussels earlier in the week.
December Comex Gold settled the week at $1223.00, up $14.40 or +1.19%
The U.S. Dollar weakened against a basket of currencies on Friday after U.S. Federal Reserve Vice Chair Richard Clarida told CNBC he saw some evidence of global growth cooling. Clarida also noted key U.S. short-term borrowing rates are close to neutral and said being at neutral “makes sense.” Bullish gold investors read this comment to mean the No. 2 Fed official may be open for the Fed to pause its rate-hike campaign sooner than previously thought.
Weekly Swing Chart Technical Analysis
The main trend is down according to the weekly swing chart. The main trend will change to up on a move through the current swing top at $1246.00. A move through $1167.10 will signal a resumption of the downtrend.
Weekly Retracement Level Technical Analysis
The short-term range is $1167.10 to $1246.00. Its retracement zone is $1206.60 to $1197.20. This zone was successfully tested last week when gold hit its low at $1196.60. This could be the first sign that a secondary higher bottom is forming.
The first intermediate range is $1278.20 to $1167.10. Its 50% level at $1222.70 is potential resistance.
The second intermediate range is $1325.40 to $1167.10. Its 50% level at $1246.30 is another potential resistance level. This level stopped the rally at $1246.00 during the week-ending October 26.
The main range is $1388.10 to $1167.10. Its retracement zone at $1277.60 to $1303.70 is the primary upside target.
Weekly Swing Chart Technical Forecast
Based on last week’s close at $1223.00, the direction of the December Comex Gold market next this week is likely to be determined by trader reaction to the first intermediate 50% level at $1222.70.
A sustained move over $1222.70 will indicate the presence of buyers. If this move generates enough upside momentum then we could see a drive into the main top at $1246.00 and the 50% level at $1246.30. This is the trigger point for an acceleration to the upside with $1277.60 to $1278.20 the major upside target.
A sustained move under $1222.70 will signal the presence of sellers. The first downside target zone is $1206.60 to $1197.20, followed by last week’s low at $1196.60.
The market could start to collapse if $1196.60 fails as support. The weekly chart indicates there is plenty of room to the downside with the next target $1167.10.
If the U.S. Dollar plunges this week then look for December Comex Gold to breakout to the upside over $1246.00.