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Gold is trading slightly lower shortly after the regular session opening on Monday. The tone in the market is cautious despite a weaker U.S. Dollar, new central bank stimulus and a strong stock market. These could all be signs of topping action. Now we may not see actual selling yet, but we may certainly see signs that the buying is drying up.
At 13:34 GMT, June Comex gold is trading $ 1734.30, down $ 1.30 or -0.07%.
Gold buyers may be getting ready to take a breather and step to the sidelines while they watch the reopening of the global economy. If all goes well then the heavy selling may start. If there is a relapse in the number of coronavirus cases and conditions worsen then look for gold to rally.
Traders don’t know what the outcome will be so they are willing to stand aside until they get some clarity.
Gold traders should also pay attention to crude oil. If prices continue to plunge then countries like Saudi Arabia and Russia may be forced to sell some of their gold to raise cash. This would also be bearish for gold.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside with the formation of a secondary lower top at $ 1764.20.
A trade through $ 1788.80 will signal a resumption of the uptrend. The main trend will change to down on a trade through the last swing bottom at $ 1666.20.
The minor range is $ 1788.80 to $ 1666.20. Its 50% level or pivot at $ 1727.50 is holding up the market today.
The short-term range is $ 1576.00 to $ 1788.80. Its retracement zone at $ 1682.40 to $ 1657.30 is the first downside target zone.
The intermediate range is $ 1453.00 to $ 1788.80. If the trend changes to down then look for the selling to extend into its retracement zone at $ 1620.90 to $ 1581.30.
Daily Swing Chart Technical Forecast
Based on the early price action and the current price at $ 1734.30, the direction of the June Comex gold market the rest of the session on Monday is likely to be determined by trader reaction to the pivot at $ 1727.50.
Bearish Scenario
A sustained move under $ 1727.50 will indicate the presence of sellers. This is a potential trigger point for an acceleration to the downside with the first target coming in at $ 1682.40.
Bullish Scenario
A sustained move over $ 1727.50 will signal the presence of buyers. If this move creates enough upside momentum then look for a retest of $ 1764.20.
