Gold futures are trading lower at the mid-session following the release of better-than-expected weekly initial claims data. However, thin trading volume may have led to an exaggerated move. Sellers are also being motivated by hawkish comments from a key Federal Reserve official on Wednesday that reinforced bets for early tapering of the central bank’s bond-buying program.
At 16:15 GMT, December Comex gold futures are trading $1807.50, down $7.00 or -0.39%.
Initial claims for state unemployment benefits fell by 14,000 to 385,000 in the week ended July 31, while layoffs dropped to their lowest level in more than 21 years last month as companies held on their workers amid a labor shortage, the Labor Department’s report showed.
The news drove U.S. Treasury yields higher, driving up the U.S. Dollar while dampening demand for dollar denominated gold.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $1839.00 will reaffirm the uptrend. A move through the pair of main bottoms at $1795.60 and $1793.10 will change the main trend to down.
The minor trend is down. This is controlling the momentum.
The minor range is $1793.10 to $1837.50. Gold is currently trading on the weak side of its pivot at $1815.30, making it resistance.
The key support is the long-term 50% level at $1795.00. The key resistance is the short-term retracement zone at $1839.90 to $1859.70.
Daily Swing Chart Technical Forecast
The direction of the December Comex gold market into the close is likely to be determined by trader reaction to the pivot at $1815.30.
A sustained move under $1815.30 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for the selling to possibly extend into the support cluster at $1795.00 to $1793.10. The latter is a potential trigger point for an acceleration to the downside.
A sustained move over $1815.30 will signal the presence of buyers. If this move can attract a new wave of strong buyers then look for the rally to possibly extend into the resistance cluster at $1837.50 to $1839.90. The latter is a potential trigger point for an acceleration to the upside.