Gold futures broke sharply shortly after the regular session opening on profit-taking after an almost week-long rally. The catalysts behind the selling pressure was rising Treasury yields, a firmer U.S. Dollar and increasing appetite for risk. Despite the weakness, some investors believe the combination of dovish central bank policy and forecasts calling for a slowing global economy are likely to underpin gold prices.
At 13:04 GMT, June Comex gold is trading $1299.50, down $14.40 or -1.10%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1330.80 will change the main trend to up. A move through $1284.90 will signal a resumption of the downtrend.
The minor trend is up. A new minor top was formed at $1314.70. A trade through this top will reaffirm the minor trend. A trade through $1284.90 will change the minor trend to down.
The main range is $1330.80 to $1284.90. Its retracement zone at $1307.90 to $1313.30 is resistance. This zone stopped the rally on Wednesday.
The short-term range is $1284.90 to $1314.70. Its retracement zone at $1299.80 to $1296.30 is currently being tested. This zone is very important because aggressive counter-trend buyers are going to try to form a secondary higher bottom. Sellers are going to try to drive the market through $1296.30 in an effort to form a new main top at $1314.70.
Daily Technical Forecast
Based on the early price action and the current price at $1299.50, the direction of the June Comex gold market the rest of the session is likely to be determined by trader reaction to the short-term 50% level at $1299.80.
A sustained move over $1299.80 will indicate the return of buyers. This could trigger a retest of the price cluster at $1304.80 to $1304.90.
Taking out $1304.90 will indicate the buying is getting stronger. This could trigger a rally into a 50% level at $1307.90, followed by a Fibonacci level at $1313.30 and the minor top at $1314.70.
A sustained move under $1299.80 will signal the presence of sellers. This could lead to a test of the short-term Fibonacci level at $1296.30, followed by an uptrending Gann angle at $1294.90.
If $1294.90 fails as support then look for the selling to extend into the next uptrending Gann angle at $1289.90. This is the last potential support before the major 50% level at $1285.50 and the main bottom at $1284.90.