Gold futures settled slightly higher last week but well off its highs. The market also posted an inside move, which tends to indicate investor indecision and impending volatility. Controlling the price action was the easing of tensions over the trade dispute between the U.S. and China, increased demand for risky assets and expectations of another rate hike by the U.S. Federal Reserve.
For the week, December Comex Gold settled at $1201.30, up $0.20 or +0.02%.
Weekly Swing Chart Technical Analysis
The main trend is down according to the weekly swing chart. The market is in no position to change the main trend to up, but there is room for a normal retracement. A trade through $1167.10 will signal a resumption of the downtrend.
The minor trend is also down. The minor trend will change to up on a trade through $1278.20. This will also signal a shift in momentum.
Gold has been trading inside the range formed the week-ending August 17 for 5 weeks. The top end of the range is $1221.40. The bottom of the range is $1167.10. Given the prolonged sideways price action, traders should look for a volatile breakout over $1221.40, or a volatile breakdown under $1167.10. A breakout to the upside will not signal a change in trend.
The short-term range is $1167.10 to $1221.40. Its 50% level or pivot is $1194.30. This zone is essentially controlling the near-term direction of the market. It has been acting like support for 5 weeks.
The intermediate range is $1278.20 to $1167.10. Its 50% level at $1222.70 is the first upside target. It has been acting like resistance. However, it is also the trigger point for a potential breakout to the upside.
Another intermediate range is $1325.40 to $1167.10. It 50% level or pivot at $1246.30 is the next upside target.
The main range is $1388.10 to $1167.10. Its retracement zone at $1277.60 to $1303.70 is the primary upside target.
Weekly Swing Chart Technical Forecast
Based on Friday’s close at $1201.30 and the recent price action, the direction of the December Comex Gold futures contract is likely to be determined by trader reaction to the short-term pivot at $1194.30.
A sustained move over $1194.30 will indicate the presence of buyers. The first upside targets are $1221.40 and $1222.70. Look for an acceleration to the upside if $1222.70 is taken out with conviction. This move could create the upside momentum needed to challenge the next target level at $1246.30.
A sustained move under $1194.30 will signal the presence of sellers. The daily chart is wide open under this level with the next two targets $1167.10 and $1162.00. The latter is also the trigger point for an acceleration to the downside.