Gold futures are trading steady early Monday. Today, investors will be taking their cues from the movement of Treasury yields and the U.S. Dollar. Lower yields should help make the dollar a less-desirable investment while driving up demand for dollar-denominated gold.
At 2232 GMT, August Comex Gold is trading $1256.50, up $0.70 or +0.05%.
The price action the first two days of the week should tell us if last week’s daily/weekly closing price reversal bottom chart pattern was real or just a few traders taking advantage of the below-average volume trading conditions.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum shifted to the upside with the formation of the closing price reversal bottom on July 3 and the subsequent confirmation on July 5.
A trade through $1262.40 will indicate the upside momentum is getting stronger. The main trend will change to up on a trade through $1274.40. A trade through $1238.80 will negate the closing price reversal bottom and signal a resumption of the downtrend. This could drive the market into a series of bottoms at $1230.70, $1228.20 and $1217.20.
The main range is $1274.40 to $1238.80. Its retracement zone at $1256.60 to $1260.80 is currently being tested. Since the trend is down, sellers are coming in on a test of this zone. Overcoming it could drive the market into the next retracement zone at $1275.90 to $1284.70.
The short-term range is $1238.80 to $1262.40. The key area to watch is its 50% level or pivot at $1250.60. Aggressive counter-trend buyers may step in on a test of this level in an effort to produce a secondary higher bottom.
Daily Swing Chart Technical Forecast
Based on Friday’s close at $1255.80, the direction of the August Comex Gold market on Monday is likely to be determined by trader reaction to the 50% level at $1256.60.
A sustained move under $1256.60 will indicate the presence of sellers. This could drive gold into $1250.60. Watch for a counter-trend bounce on the first test of this level. If it fails then we’re likely to retest $1238.80.
A sustained move over $1256.60 will signal the presence of buyers. This could lead to a quick test of the Fib level at $1260.80 and last week’s high at $1262.40.
Overtaking $1262.40 could trigger an acceleration to the upside with the first targets the main top at $1274.40 and the 50% level at $1275.90.