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Gold futures are inching lower early Wednesday after touching a more than one-week low earlier in the session. Weighing on the precious metal are a firmer U.S. Dollar and rising U.S. Treasury yields. Gold sellers are also reacting to a bearish move by the People’s Bank of China.
At 03:16 GMT, June Comex gold futures are trading $1948.90, down $10.10 or -0.52%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $181.77, down $2.84 or -1.54%.
Factors Weighing on Prices
The U.S. Dollar is holding near recent multi-year highs, making greenback-priced gold less attractive to foreign buyers. The strength in the greenback was supported by U.S. Treasury yields which continued to surge to multi-year highs as investors prepared for the Federal Reserve to aggressively raise rates as the central bank tries to stem soaring inflation.
In other news, China kept its benchmark lending rates for corporate and household loans steady at its April fixing, defying expectations, as Beijing has become more cautious in rolling out easing measures to aid a slowing economy. Bullish gold traders were hoping the People’s Bank of China would ease rates.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $1916.20 will change the main trend to down. A move through $2003.00 will signal a resumption of the uptrend.
The minor trend is down. The trend turned down on Tuesday. This shifted momentum to the downside.
On the upside, the first resistance is a long-term Fibonacci level at $1958.70. This is followed by a short-term retracement zone at $1987.60 to $2009.90. This zone stopped the buying on Monday at $2003.00.
On the downside, the first support is a 50% level at $1932.90. This is followed by a support cluster at $1908.10 to $1897.70.
Daily Swing Chart Technical Forecast
The direction of the June Comex gold futures contract early Wednesday is likely to be determined by trader reaction to $1958.70.
Bearish Scenario
A sustained move under $1958.70 will indicate the presence of sellers. The first downside target is $1932.90. Look for buyers on the first test of this level. If it fails then look for the selling to possibly extend into the main bottom at $1916.20, followed by the support cluster at $1908.10 – $1897.70.
Bullish Scenario
A sustained move over $1958.70 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into $1987.60 to $2009.90.
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