In This Article:
Gold futures are edging lower Tuesday as U.S. Treasury yields firmed for a third session and the dollar rebounded slightly from a two-week decline. Despite finishing higher last week, gold is poised for its second straight monthly loss for the first time since March 2021.
At 04:28 GMT, August Comex gold futures are trading $1854.80, down $2.50 or -0.13%. There was now trading on Monday, but on Friday, the SPDR Gold Shares ETF (GLD) settled at $172.88, up $0.12 or +0.07%.
Gold prices will be influenced by the direction of U.S. Treasury yields and the U.S. Dollar. Higher yields lower the appeal of zero-yielding gold, while a stronger U.S. Dollar makes the greenback more expensive for the holders of foreign currencies.
Bullion prices have fallen sharply since the Fed started to hike interest rates in March. However, prices have stabilized somewhat since the middle of May on fears of a recession.
Although last week’s economic data for April signaled the economy is still strong, traders are still not sure if this trend will continue after the 50 basis point rate hike in May, and expectations of similar moves in June and July. This suggests heightened volatility could be the norm over the near-term.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $1875.00 will change the main trend to up. A move through $1842.50 will signal a resumption of the downtrend.
The minor trend is up. A trade through $1842.50 will shift momentum to the downside.
The market is currently straddling a minor 50% level at $1854.80. The major support is the long-term Fibonacci level at $1844.00, followed by another minor pivot at $1833.50.
Daily Swing Chart Technical Forecast
Trader reaction to $1854.80 and $1833.50 will likely determine the direction of the August Comex gold futures contract on Tuesday.
Bullish Scenario
A sustained move over $1854.80 will indicate the presence of buyers. If this move generates enough upside momentum then look for a possible surge into $1875.00.
Taking out $1875.00 will change the main trend to up and could trigger a surge into the pair of 50% levels at $1890.00 – $1900.30.
Bearish Scenario
A sustained move under $1833.50 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor bottom at $1811.70, followed by the main bottom at $1792.00.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire