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Gold futures are edging higher early Tuesday as the U.S. Dollar gave back some of yesterday’s gains against a basket of currencies. Helping to put a lid on prices, however, are firm U.S. Treasury yields. The range is tight and volume relatively low as investors cautiously looked forward to U.S. inflation data that could influence the Federal Reserve’s timeline for easing bond purchases.
At 03:25 GMT, August Comex gold is trading $1811.50, up $5.60 or +0.31%.
The closely watched U.S. consumer price index (CPI) report is due to be released on Tuesday at 12:30 GMT. Economists expected the CPI to have risen by 0.5%, down from the last month’s 0.6%. Core U.S. consumer prices are expected to have risen 0.4% in June, according to a Reuters poll.
If the CPI comes in lower than expected, the Fed would feel slightly less inclined to ease its asset purchases, which would support gold prices, but if it is concerned about inflation, it is more likely to address tapering stimulus, pressuring gold prices.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1906.90 and $1919.20 will change the main trend to up. A move through $1750.10 will signal a resumption of the downtrend.
The minor trend is also down. A trade through $1819.50 will change the minor trend to up, while a more through $1791.00 will signal the return of sellers.
The gold market is currently trading on the strong side of a long-term retracement zone at $1798.80 to $1770.40. Inside this zone is a minor pivot at $1784.80. All of these levels are potential support.
The short-term range is $1919.20 to $1750.10. Its retracement zone at $1834.70 to $1854.60 is the primary upside target. Since the main trend is up, sellers are likely to come in on a test of this area.
Daily Swing Chart Technical Forecast
The direction of the August Comex gold market on Tuesday is likely to be determined by trader reaction to the long-term 50% level at $1798.80.
Bullish Scenario
A sustained move over $1798.80 will indicate the presence of buyers. The first upside target is the minor top at $1819.50. Taking out this level will change the minor trend to up and shift momentum to the upside. This could trigger a surge into the short-term retracement zone at $1834.70 to $1854.60.
Bearish Scenario
A sustained move under $1798.80 will signal the presence of sellers. This could create a labored break with targets coming in at $1791.00 and $1784.80.
A failure to hold $1784.80 will indicate the selling is getting stronger. This could trigger a further break into $1770.40. This is a potential trigger price for an acceleration into the main bottom at $1750.10.