Higher demand for risky assets in the wake of stronger-than-expected earnings reports before the U.S. stock market opening are weighing on gold prices shortly after the regular session opening. The precious metal is also feeling the effect of firmer U.S. Treasury yields and a slightly better U.S. Dollar, which is lowering foreign demand for the dollar-denominated asset.
At 12:25 GMT, June Comex gold is trading $1274.90, down $2.80 or -0.21%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1273.00 will signal a resumption of the downtrend. Earlier today, gold hit an intraday low of $1273.10. Gold is in no position to change the trend to up, but due to the prolonged move down in terms of price and time, it is in the window of time for a closing price reversal bottom. This will take place if $1273.00 fails, but the market closes higher.
The minor trend is also down. A trade through $1281.90 will change the minor trend to up. This will also shift momentum to the upside.
The major support is the retracement zone at $1272.70 to $1253.00.
Daily Technical Forecast
Based on the early price action, the direction of the June Comex gold futures contract will be determined by trader reaction to the uptrending Gann angle at $1274.30 and the major 50% level at $1272.70.
A sustained move over $1274.30 will indicate the presence of buyers. If this can generate enough upside momentum then look for a potential rally into the minor top at $1281.90. Taking out this level should lead to a test of the downtrending Gann angle at $1282.70.
The angle at $1282.70 is a potential trigger point for an acceleration to the upside with the next target angle coming in at $1290.80.
A sustained move under $1272.70 will signal the presence of sellers. The daily chart is wide open under this level so don’t be surprised by an acceleration to the downside. The primary downside target if this case develops will be $1253.00.
This article was originally posted on FX Empire
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