Gold futures are trading higher on Monday as fears of a recession are pressuring the U.S. Dollar, while increasing gold’s appeal as a safe-haven asset. The market is also being underpinned by lower demand for riskier assets with U.S. equity markets tumbling to a 12-day lower earlier in the session.
Worries over a potential recession arose on Friday when the 10-year Treasury note yield fell below the 3-month Treasury bill yield, causing an inverted yield curve for the first time since 2007. Analysts say that this is a highly accurate predictor of a future recession.
At 13:17 GMT, June Comex gold is trading $1324.70, up $6.00 or +0.45%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $1326.30 will indicate the counter-trend buying is getting stronger. The main trend will actually turn up on a trade through $1356.00. A move through $1287.50 will reaffirm the downtrend.
The main range is $1356.00 to $1287.50. Its retracement zone at $1321.80 to $1329.80 is currently being tested. This zone is controlling the near-term direction of the market.
Daily Technical Forecast
Based on the early price action and the current price at $1324.70, the direction of the June Comex gold futures contract the rest of the session is likely to be determined by trader reaction to the main 50% level at $1321.00.
A sustained move over $1321.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for buyers to take out last week’s high at $1226.30. This could trigger a surge into the main Fibonacci level at $1329.80. This is followed closely by a downtrending Gann angle at $1333.00.
A sustained move under $1321.00 will signal the presence of sellers. If this move creates enough downside momentum then look for a potential break into the uptrending Gann angle at $1311.50. This angle has been guiding the market higher since the main bottom was formed at $1287.50 on March 7.
If $1287.50 fails then look for a break into the downtrending Gann angle at $1310.00. This is a potential trigger point for an acceleration into the next uptrending Gann angle at $1299.50.
This article was originally posted on FX Empire
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