Technical Analysis – Gold outlook worsens at new lows; 1,600 level comes in sight

Gold drifted southwards to unlock a new 29-month low at 1,614 earlier today after Tuesday’s recovery attempt ceased at 1,642.

The downtrend extension has opened the door for the 1,600 round level as the RSI and the MACD in the four-hour chart keep lacking direction within the bearish territory, although the rebound in the stochastics is endorsing the current bullish move in the market.

Sliding below the 1,600 psychological mark, the precious metal could seek shelter within the 1,585 – 1,565 zone last seen in the first half of 2020. A continuation lower could take a breather somewhere between 1,545 – 1,535, while deeper, the bears will probably face a tense battle at the channel’s lower band around 1,518.

In the event buying appetite strengthens above the short-term tentative descending trendline at 1,629, traders will look for a break above the 1,642 resistance. If the bulls manage to hold up, all eyes will turn to the 50-period simple moving average at 1,655.

Overall, gold’s 2022 outlook remains grim, and any potential upturns could do little to reverse the bearish trajectory in order to reach the previous high of 1,734.

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