Gold futures are trading higher early Thursday under holiday-muted volume. The market is being supported by a weaker U.S. Dollar and flat Treasury yields. The greenback is being pressured by renewed risk appetite which offset its appeal as a safe-haven asset. The increase in risk appetite is being fueled by an encouraging Omicron study and increased optimism around the global economic outlook.
The U.S. Dollar Index hovered near a one-week low against riskier currencies and asset classes, making gold less expensive for holders of foreign currencies.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1815.70 will reaffirm the uptrend. A move through $1785.00 will change the main trend to down.
The minor support is a retracement zone at $1784.40 to $1777.00. The major support is a long-term retracement zone at $1781.00 to $1757.10. The combination of these two retracement zones creates an important support cluster at $1784.40 to $1781.00. The recent main bottom at $1785.00 stopped just above this area.
Another minor range is $1815.70 to $1785.00. The market is currently trading on the strong side of its pivot at $1800.40, making it potential support.
The short-term range is $1881.90 to $1753.00. Its retracement zone at $1817.50 to $1832.70 is the primary upside target. Aggressive counter-trend sellers could come in on the first test of this area. Taking out the upper level could trigger an acceleration to the upside.
Daily Swing Chart Technical Forecast
The direction of the February Comex gold futures contract on Friday is likely to be determined by trader reaction to $1800.40.
A sustained move over $1800.40 will indicate the presence of buyers. If this more continues to drive the upside momentum then look for a surge into the main top at $1815.70, followed by a 50% level at $1817.50.
A sustained move under $1800.40 will signal the presence of sellers. This could lead to a retest of the main bottom at $1785.00, followed by a support cluster at $1784.40 to $1781.00.
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