Gold Price Futures Technical Analysis (GC) – Weak as Investors Brace for a Prolonged Period of High Interest Rates

Gold prices are under pressure late in the session on Tuesday as traders continue to prepare for a long period of high interest rates in the United States and around the world.

After Fed Chairman Powell signaled the need for a more aggressive central bank on Friday, gold came under pressure. The problems are that rising rates mean lower demand for interest-free bearish gold and a stronger US dollar means lower demand from foreign currency holders.

As of 18:00 GMT, December Comex gold futures are trading at $1737.10, down $12.60 or -0.72%. The SPDR Gold Shares ETF (GLD) is at $160.53, down $1.33 or -0.82%.

US economic data also weighed on gold prices today. U.S. job openings rose in July and data for the previous month was revised upwards, indicating continued strong labor demand that gives the Federal Reserve the green light to maintain its increases aggressive interest rates.

Belligerent comments from a Fed official also supported higher yields. The final remarks came from New York Fed President John Williams on Tuesday. “I think with demand far outstripping supply, we need to get real interest rates…above zero. We need to have a somewhat restrictive policy to slow down demand, and we’re not there yet,” Williams told the Wall Street Journal. “We’re still pretty far from that,” he added.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the main bottom at $1727.00 will reaffirm the downtrend. A trade through the main low at $1778.80 will change the main trend to the upside.

On the upside, the closest resistance is a pair of 50% levels at $1760.40 and $1776.20. On the downside, the closest support is a long-term 50% level at $1709.10.

Short-term outlook

The reaction of traders at $1749.70 will determine the direction of December’s Comex gold futures through Tuesday’s close.

Downside scenario

A sustained move below $1749.70 will indicate the presence of sellers. If this generates enough downward momentum, expect selling pressure to eventually extend to the main low at $1727.00.

The removal of this level will reaffirm the downtrend with $1709.10 the next major target. If this level fails, look for further selling in the support cluster at $1696.10 to $1694.50. The latter is a potential trigger point for downward acceleration.

Bullish scenario

A sustained move above $1749.70 will signal the presence of buyers. This could lead to a labored rally with potential targets at the 50% level at $1760.40 and the resistance cluster at $1776.20-$1778.80.

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