December Comex gold futures are trading lower and inside yesterday’s range. This indicates investor indecision and impending volatility. The market is being influenced by both the U.S. Dollar and the stock market.

If the dollar continues to weaken then gold should rally, but gains will be limited if stocks continue to post new all-time highs. Gold could surge if the dollar falls and stocks get hit hard.

The current price action suggests that money is flowing into gold slowly. However, a steep break in the stock market will take care of this condition.

Technical Analysis

The main trend is up according to the daily swing chart. Taking out yesterday’s high at $1280.30 will signal a resumption of the uptrend. However, we’re still in the window of time for a closing price reversal top so make sure you have volume behind you if playing the breakout.

The main trend will change to down on a trade through $1249.40.

Support remains the major 61.8% level at $1269.40 and the 50% level at $1258.30.

If there is a change in trend to down then $1245.70 to $1237.50 will become the primary downside target.

Forecast

Based on the current price at $1272.70, the direction of the market will be determined by trader reaction to the support cluster at $1269.40.

A sustained move over $1269.40 will indicate the presence of buyers. The first target is an uptrending angle at $1279.10, followed by $1280.30 and a downtrending angle at $1285.50.

The angle at $1285.50 is the trigger point for an acceleration into $1295.50. This is the last potential resistance angle before the $1305.50 main top.

If $1269.40 fails then look out to the downside. Gold could accelerate into a loose price cluster at $1259.40 to $1258.30. This area is another trigger point for an acceleration into $1249.40 then $1245.70.

Basically, look for an upside bias to develop on a sustained move over 1279.10 and for a downside bias to develop on a sustained move under $1269.40.

This article was originally posted on FX Empire

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