Gold futures spiked to nearly a six-week low last week, but the market was able to recover most of the loss on Friday. The market was pressured by a strong U.S. Dollar which made dollar-denominated gold a less attractive investment. The catalyst behind the strength in the dollar was another quarter-point rate hike by the Fed and expectations of another rate hike in December, and perhaps as many as three more in 2019. Strong U.S. economic data also pressured gold prices, led by 4.2% Gross Domestic Product growth.
For the week, December Comex Gold settled at $1196.20, down $5.10 or -0.42%.
Weekly Technical Analysis
The main trend is down according to the weekly swing chart. A trade through $1167.10 will signal a resumption of the downtrend. The market is in no position to change the main trend to up.
The market has been trading inside the $1167.10 to $1221.40 range for six weeks. This is a breakout range. The trend won’t change to up on a move through $1221.40, but we could see a strong rally due to aggressive short-covering.
The short-term range is $1167.10 to $1221.40. Its 50% level or pivot is $1194.30. This price is controlling the near-term direction of the market.
On the upside, the first major resistance is a retracement zone at $1250.00 to $1277.20.
Weekly Technical Forecast
Based on last week’s close at $1196.20, the direction of the December Comex Gold futures contract this week is likely to be determined by trader reaction to the pivot at $1194.30. The close was also on the bullish side of a long-term downtrending Gann angle at $1188.10. This is important because this angle has been guiding the market lower for 24 weeks, or since the $1388.10 main top the week-ending April 13.
A sustained move over $1194.30 will indicate the presence of buyers. The first upside target is a longer-term uptrending Gann angle at $1209.20.
Overtaking $1209.20 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to extend into $1221.40. Taking out this level with conviction could trigger a rally into $1250.00, followed by $1277.20.
A sustained move under $1209.20 will signal the presence of sellers. Crossing to the weak side of the downtrending Gann angle at $1188.10 will indicate the selling is getting stronger. This could trigger a further break into another long-term uptrending Gann angle at $1185.60.
The daily chart opens up to the downside under $1185.60 with targets coming in at $1167.10 and $1162.00.