Gold futures shrugged off earlier weakness to surge to its highest level since October 26. The price action was driven by the weaker U.S. Dollar, which is feeling the effects of a plunge in U.S. Treasury yields. Earlier in the session, the greenback was underpinned and the dollar pressured by another steep break in the equity markets. This made the dollar a more attractive safe-haven buy. However, the move came to halt when yields tumbled.
At 1733 GMT, February Comex gold is trading $1246.60.
Daily Technical Analysis
The main trend is up according to the daily swing chart. At its current price, the market is in a position to challenge the October 26 top at $1252.00. Earlier today, buyers took out the previous week’s high to trade at $1249.90, before retreating.
On the downside, the minor trend will change to down on a trade through $1221.80. The main trend changes to down on a move through $1216.80. Friday will be the seventh day up from the last swing bottom. This will put the market inside the window of time for a closing price reversal top.
Daily Technical Forecast
Based on the earlier price action, the direction of the February Comex gold market into the close is likely to be determined by trader reaction to a pair of downtrending Gann angles at $1248.50 and $1245.00.
A sustained move over $1248.50 will indicate the buying is getting stronger. This could trigger a rally into the main top at $1252.00. This price is the trigger point for an acceleration to the upside. The daily chart shows there is no resistance until $1284.10.
A sustained move under $1245.00 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into the next downtrending Gann angle at $1238.00, followed by a major uptrending Gann angle at $1234.50. Since the main trend is up, buyers are likely to come in on a test of this angle.
This article was originally posted on FX Empire
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