Gold Price Futures (GC) Technical Analysis – Struggling to Find Buyers Ahead of US Final GDP Report
Gold futures are drifting lower for a third straight session on Wednesday amid relatively light volume as traders weighed the prospects of higher interest rates against the potential for recession risks. The price action suggests traders are waiting for more economic data to confirm either result.
Without fresh economic data, traders have to rely on benchmarks such as Treasury yields and the U.S. Dollar. Early in the session, capping gains are a stronger U.S. Dollar. However, limiting losses was a dip in U.S. Treasury yields.
In other news, gold traders showed little response to a U.S. consumer confidence report on Tuesday that fell sharply in June as worries about high inflation left consumers anticipating economic growth would weaken significantly in the second half of the year.
The Conference Board said on Tuesday its consumer confidence index dropped 4.5 points to a reading of 98.7 this month.
Later today at 12:30 GMT, the U.S. will release Final GDP figures for the first quarter. It is expected to show a 1.5% decline. This would match the preliminary estimate.
Final GDP is always tricky because the data is 90 days old. Traders are already looking at 2nd quarter data.
Fed Chair Powell is also scheduled to speak at 13:00 GMT. If he talks about monetary policy, he’s expected to reiterate that the Fed is committed to driving down inflation.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1806.10 will reaffirm the downtrend. A move through $1861.50 will change the main trend to up.
The minor trend is also down. A trade through $1842.80 will change the minor trend to up. This will shift momentum to the upside.
The market is also trading on the weak side of a series of retracement levels, making $1826.60, $1837.30 and $1844.00, resistance. The long-term Fibonacci level at $1844.00 is controlling the near-term direction of the market.
Daily Swing Chart Technical Forecast
Trader reaction to the short-term Fibonacci level at $1826.60 is likely to determine the direction of the August Comex gold on Wednesday.
A sustained move under $1826.60 will indicate the presence of sellers. Taking out the minor bottom at $1817.77 will indicate the selling pressure is getting stronger. This could trigger an intraday acceleration into the main bottom at $1806.10.
A trade through $1806.10 will reaffirm the downtrend with $1792.00 – $1787.80 the next two major targets.
A sustained move over $1826.60 will signal the return of buyers. However, the next move is expected to be labored with upside targets coming in at $1837.30 and $1844.00.
We won’t get excited about the upside potential until we see a close over $1844.00.