Gold futures are nudging higher on Monday shortly before the cash market opening. However, the market remains inside its July 11 range for a second session, which suggests investor indecision and impending volatility. The lack of movement in the U.S. Dollar and Treasury yields is helping to contribute to the tight trading range.
At 10:19 GMT, August Comex gold is trading $1417.30, up $5.10 or +0.36%.
Gold has been drifting sideways to lower since its multi-year high at $1442.90 on June 25. That was the day that many investors believe Fed Chair Jerome Powell killed the chances of a 50-basis rate cut in late July. Last week, Powell lit the lamp for a 25-basis point rate hike, something that gold traders priced in nearly a month ago, but the chances of a half-a-point cut continue to spiral lower. This is likely to drive the price action over the near-term.
Traders will be looking at this week’s U.S. economic data while listening to several Fed speakers to determine whether there is any chance of a 50-basis point rate cut. Gold will likely rise if investors put this aggressive move back in play. Otherwise, we’re looking at sideways-to-lower over the near-term.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1441.00 will signal a resumption of the uptrend, while a move through $1442.90 could trigger a breakout to the upside.
The main trend will change to down on a move through $1387.50. Taking out the next main bottom at $1384.70 will likely fuel an acceleration to the downside.
The short-term range is $1442.90 to $1384.70. Its 50% level or pivot at $1413.80 is controlling the direction of the market today.
The intermediate range is $1323.60 to $1442.90. Its retracement zone at $1383.30 to $1369.20 is support.
The main range is $1274.60 to $1442.90. Its retracement zone at $1358.80 to $1338.90 is potentially major support. It is controlling the longer-term direction of the market.
Daily Technical Forecast
Based on the early price action, the direction of the August Comex gold market on Monday is likely to be determined by trader reaction to the pivot at $1413.80.
A sustained move over $1413.80 will indicate the presence of buyers. Look for a labored rally with potential resistance angles coming in at $1415.60, $1416.90 and $1422.60.