Gold futures are edging lower on Thursday, shortly before the release of three U.S. economic reports that could set the tone for the day.
Traders may still be digesting yesterday’s Fed minutes, but since they didn’t reveal anything new, we don’t think they are pressuring prices today. In fact, the market is actually little changed since the release of the minutes.
Ultimately, the next major move in gold will be determined the direction of Treasury yields. And their direction is likely to be controlled by U.S. economic data now that the Fed has revealed its plans.
On Thursday, a second estimate of U.S. gross domestic product growth for the first quarter is due out at 12:30 GMT. If is expected to show the economy contracted by 1.3%, slightly better than the first estimate of -1.4%.
The number of jobless claims filed during the week ended May 21 is also set to come out at 12:30 GMT. It is expected to show that 217K Americans filed for job benefits, down from last week’s 218K figure.
April’s pending home sales data is slated for release at 14:00 GMT. Traders are looking for a 1.9% decline, more than the previously reported 1.2%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1875.00 will change the main trend to up. A move through $1792.00 will signal a resumption of the downtrend.
The minor trend is also down. A trade through $1811.70 will change the minor trend to down. This will shift the momentum.
The key support is the long-term Fibonacci level at $1844.00. Following this is a minor retracement zone at $1833.50 to $1823.70.
The nearest resistance is a 50% level at $1854.80. This is a potential trigger point for an acceleration into a pair of 50% levels at $1890.00 to $1900.30.
Daily Swing Chart Technical Forecast
Trader reaction to $1844.00 and $1854.80 will likely determine the direction of the August Comex gold futures contract on Thursday.
A sustained move over $1854.80 will indicate the presence of buyers. If this move generates enough upside momentum then look for a test of the main top at $1875.00.
Taking out $1875.00 will change the main trend to up and could trigger an acceleration into $1890.00 to $1900.30.
A sustained move under $1844.00 will signal the presence of sellers. This could trigger a quick break into the minor retracement zone at $1833.50 to $1823.70. Aggressive counter-trend buyers could come in on a test of this area. They are going to try to form a potentially bullish secondary higher bottom.
If $1823.70 fails to hold then look for a steep break into $1811.70, followed by $1792.00.