Gold futures spiked through recent resistance to hit its highest level since July 26 earlier in the session as stock market volatility and a 500 point drop in the Dow Jones Industrial Average encouraged investors to seek shelter in the safe haven asset. The rally stalled, however, after the stock market mounted a dramatic turnaround following a test of key value areas which proved to be attractive to investors.
At 1953 GMT, December Comex Gold is trading $1233.70, up $9.10 or +0.74%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1244.70 will signal a resumption of the uptrend. The next main top comes in at $1278.20.
The market is in no position to change the main trend to down, however, it is up 17 days from the last main bottom which puts it in the window of time for a potentially bearish closing price reversal top.
On the upside, the major resistance is a retracement zone at $1246.30 to $1264.90.
The main range is $1278.20 to $1167.10. Its retracement zone is $1222.70 to $1235.80. This zone is controlling the near-term direction of the gold market. A sustained move over $1235.80 will give the market an upside bias. A sustained move under $1222.70 will give gold a downside bias.
The short-term range is $1184.30 to $1243.00. If the bias shifts to the downside then its retracement zone at $1210.60 to $1204.40 will become the primary downside target.
Daily Technical Forecast
Based on Tuesday’s price action, the longer-term direction for gold is likely to be determined by trader reaction to the downtrending Gann angle at $1240.70. This angle essentially stopped the rally on Tuesday.
A sustained move under $1240.70 will indicate the presence of sellers. This is followed by the main Fibonacci level at $1235.80. A sustained move under this level will indicate the selling is getting stronger. The next two targets are the main 50% level at $1222.70 and the uptrending Gann angle at $1218.30.
A sustained move over $1240.70 will signal the presence of buyers. This could trigger a spike into the main top at $1244.70, followed by the major 50% level at $1246.30. This is a trigger point for a potential acceleration to the upside with the first target angle coming in at $1259.50, followed by the major Fibonacci level at $1264.90.