August Comex Gold futures are trading steady-to-higher shortly before the U.S. opening. The market has been reactive lately and investors seem to be waiting for direction from the equity markets and the U.S. Dollar before making their next major decision.Gold could become range bound or continue to drift lower over the near-term if the market continues to lose its safe-haven appeal. Traders have been selling gold because of the increasing easing of risk aversion. The current price action suggests that central banks worldwide have to include more stimulus packages in their monetary policies, leading to risk asset appreciation.
Current data from the U.S. Commodity Futures Trading Commission (CFTC) showed that gold’s appeal as a safe-haven asset waned with speculators cutting their record bullish bets for the first time in five weeks.
Gold traders are also worried that the Fed could raise interest rates before the end of the year, given the robust jobs report earlier in the month and Friday’s much-better-than-expected U.S. Retail Sales figures.
Technically, the main trend is up according to the daily swing chart. However, momentum has been to the downside since July 6.
The main range is $1252.80 to $1377.50. Its retracement zone is $1315.20 to $1300.40. This is the primary downside target. Since the main trend is up, we could see a technical bounce on the first test of this zone if buyers decide to come in to defend the trend. An uptrending angle passes through this zone today at $1312.80, making it a valid downside target also.
Based on Friday’s close at $1327.40 and the early price action, the direction of the market today is likely to be determined by trader reaction to the uptrending angle at $1333.50.
A sustained move over $1333.50 will indicate the presence of buyers. This could create enough upside momentum to challenge the downtrending angle at $1345.50. This is a potential trigger point for an acceleration to the upside with the next target angle coming in at $1361.50.
A sustained move under $1333.50 will signal the presence of sellers. The daily chart indicates there is room to the downside so if there is enough momentum we could see a test of last week’s low at $1320.40, the 50% level $1315.20 and the uptrending angle at $1312.80.
The angle at $1312.80 is also the trigger point for an acceleration to the downside with the next key target the Fibonacci level at $1300.40.
Watch the price action and read the order flow at $1333.50 today. Look for an upside bias to develop on a sustained move over this angle and a downside bias to develop if sellers successfully defend this angle.
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