ECONOMY

April Gold Rebounding Ahead of US CPI Report

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Comex gold futures are edging higher on Thursday after a successful test of a minor 50% level earlier in the session. After yesterday’s steep sell-off, today’s price action suggests investors are in the “buy the dip” mode.

While Wednesday’s sell-off was impressive, it really didn’t damage the bullish chart pattern. There was no reversal top or change in trend, which typically are associated with topping patterns. All it may have done was relieve some of the upside pressure.

Today’s price action may be a sign that investors are concerned about valuation and chasing the market higher at current price levels. They may now be looking for value or buying gold at the price they want.

At 12:56 GMT, April Comex gold futures are trading $2010.30, up $22.10 or +1.11%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $185.87, down $5.64 or -2.94%.

As we wrote on Wednesday, traders are primarily being driven by rising inflation and the war in Ukraine. Overbought indicators don’t mean anything. At 13:30 GMT, the government will release data on US Consumer Inflation for February. It is expected to come in at 0.8%. Core CPI is expected to have risen 0.5%. This report could be the source of volatility.

Daily April Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $2078.80 will signal a resumption of the uptrend. A move through $1821.10 will change the main trend to down.

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.

The minor range is $1878.60 to $2078.80. Its 50% level at $1978.70 is support. It was tested successfully earlier today.

The major long-term range is $2117.10 to $1682.40. April Comex gold is currently trading on the strong side of its retracement zone at $1951.00 to $1899.80, making it support.

Daily Swing Chart Technical Forecast

The direction of the April Comex gold futures contract into the closer on Thursday is likely to be determined by trader reaction to $1978.70.

Bullish Scenario

A sustained move over $1978.70 will indicate the presence of buyers. The first target is a minor pivot at $2026.90.

Counter-trend sellers could come in on the first test of $2026.90. But overcoming this level could lead to a retest of the main top at $2078.80. This is a potential trigger point for an acceleration into the all-time high at $2117.10.

Bearish Scenario

A sustained move under $1978.70 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the long-term Fibonacci level at $1951.00.

Since the main trend is up, buyers could come in on the first test of $1951.00. A failure at this level, however, could trigger an acceleration into the long-term 50% level at $1899.80.

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