Gold futures are slightly higher at the start of Monday despite the first signs of a “risky” session with US equity futures rising. The US dollar is also trading blended against a basket of major currencies, suggesting that the rally in gold is fueled by aggressive speculators taking advantage of a thinly traded market.
Major players are generally expected to stay on the sidelines until January 1. This opens the door for increased volatility at low volume as rogue traders attempt to create a market.
At 12:29 GMT, February Comex gold is trading at $ 1892.20, up $ 9.00 or + 0.48%.
There are a lot of factors at play at the start of the session that could impact risk sentiment, the US dollar and gold. Traders are weighing the potential impact of a resurgent coronavirus pandemic, the upcoming U.S. Senate run-off in Georgia, and President Trump’s inability to sign the recent stimulus package passed by Congress last Monday.
Technical analysis of the daily swing chart
The main trend is up according to the daily swing chart. However, momentum has tended to wane since the formation of the closing price inversion top on December 21st. A trade up to $ 1912.00 will cancel the closing price reversal top and signal a resumption of the uptrend. The main trend will go down when moving to $ 1820.00.
The main range is $ 1,973.30 to $ 1,767.20. Its $ 1870.30 to $ 1894.60 retracement zone is currently being tested. This area controls the short-term direction of the market.
The minor range is $ 1,820.00 to $ 1,912.00. Its $ 1866.00 to $ 1855.10 retracement area is support. This zone held last Monday at $ 1,859.00.
The short-term range is $ 1,767.20 to $ 1,912.00. Its $ 1,839.60 retracement area to $ 1,822.50 is the last support area before the major retracement area at $ 1,780.50 to $ 1,705.20. This area stopped selling at $ 1,767.20 on November 30.
Gold is currently testing the upper level of its main retracement area at $ 1870.30 to $ 1894.60. The reaction from traders at this level at $ 1894.60 could set the tone for the market today.
A sustained move above $ 1894.60 will indicate the presence of buyers. This could create upward momentum to challenge the six week high at $ 1,912.00, which is also a potential trigger point for upward acceleration.
A sustained move below $ 1894.60 will signal the presence of sellers. This could take the market to the 50% level at $ 1,870.30. Breaking this level will be a sign of weakness, but the move will likely be laborious due to a series of retracement levels at $ 1,866.00, $ 1,855.10, $ 1,839.60 and $ 1,822.50.
Notes to the appendix
Volume should be light, so be careful buying strength and selling weakness due to the possibility of whip saw action.
For an overview of all of today’s economic events, check out our economic calendar.