Comex gold futures jumped the psychological $2000 level for the first time in 18 months early Monday, as investors sought protection in the wake of an escalating Russia-Ukraine crisis.
After the initial thrust in prices, the market has backed off its high, moving toward the opening and the intraday low of the session. However, most professional traders believe the market will start to pick up momentum over $2000, and will most likely move quickly toward $2100, or close to its all-time high.
At 07:26 GMT, April Comex gold futures are trading $1984.60, up $18.00 or +0.92%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $183.68, up $2.88 or +1.59%.
In other news, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to their highest level since mid-March 2021 on Friday.
The price action also suggests that investors have absorbed the widely expected 25-basis point rate hike by the Federal Reserve on March 16. Bullish speculators also don’t seem to be rattled by Friday’s stronger-than-expected U.S. Non-Farm Payrolls report.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the February 24 main top at $1976.50. A move through the intraday high at $2005.20 will signal a resumption of the uptrend.
A trade through $1821.10 will change the main trend to down. This is highly unlikely but due to the prolonged rally in terms of price and time, the market is currently inside the window of time for a closing price reversal top.
The main range is $2117.10 to $1682.40. The market is currently trading on the strong side of its retracement zone at $1951.00 to $1899.80, making it major support. This zone is essentially controlling the near-term direction of the market.
The minor trend is also up. A trade through $1878.60 will change the minor trend to down. This will also shift momentum to the downside.
Daily Swing Chart Technical Forecast
The direction of the April Comex gold futures contract on Monday is likely to be determined by trader reaction to $1966.60.
Bullish Scenario
A sustained move over $1966.60 will indicate the presence of buyers. Taking out the intraday high at $2005.20 will indicate the buying is getting stronger. This could trigger another acceleration to the upside with the August 6, 2020 main top at $2117.10 the next major upside target.
Bearish Scenario
A sustained move under $1966.60 will signal the presence of sellers. This won’t indicate a change in trend, but it will likely mean the selling is greater than the buying at current price levels. That’s just another way of saying buyers are not happy with the valuation, or that the price is ahead of the fundamentals.
If the selling continues then look for a test of the major Fibonacci level at $1951.00. Since the main trend is up, watch for buyers on the first test. If it fails then prices could collapse into at least the major 50% level at $1899.80.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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