Gold futures are inching higher early Wednesday slightly below last week’s five-month high. Volume is light, but the bullish price action this week suggests investors may be betting on a dovish message from the U.S. Federal Reserve later today at 1900 GMT.
The Fed is widely expected to raise its benchmark interest rate by 25 basis points to 2.50%, however, gold investors are more interested in what the Federal Open Market Committee led by Fed Chair Jerome Powell will have to say about the strength of economy, inflation and the pace of future rate hikes in 2019 and 2020.
At 0815 GMT, February Comex gold is trading $1254.30, up $0.70 or +0.06%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1256.60 will negate the closing price reversal top from December 10 while reaffirming the uptrend. A trade through $1236.50 will change the main trend to down.
The short-term range is $1256.60 to $1236.50. Its 50% level or pivot at $1246.60 is the nearest support.
The intermediate range is $1216.80 to $1256.60. Its retracement zone at $1236.70 to $1232.00 is new support. This zone stopped the selling on December 14 at $1236.50.
The main range is $1202.40 to $1256.40. Its retracement zone at $1229.50 to $1223.10 is the major support.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the February Comex gold futures contract on Wednesday is likely to be determined by trader reaction to the main top at $1256.60.
Taking out $1256.60 with strong volume will signal a resumption of the uptrend. The daily chart indicates there is plenty of room to the upside over this level so prepared for a potential acceleration. The daily chart pinpoints the next major upside target as the July 9 top at $1284.10.
The inability to overcome $1256.60 will signal the presence of sellers. This could trigger a break into the pivot at $1246.60. Since the main trend is up, buyers could come in on the first test of this level.
A failure to hold $1246.60 will indicate the selling is getting stronger. This could trigger a further break into the support cluster at $1236.70 to $1236.50. Once again buyers could come in on the first test of this area. If $1236.50 fails then look for the selling to extend into $1232.00 to $1229.50.