Technical Analysis – Gold ranges below 1,800 while downside risks endure   

Gold is consolidating around its red Tenkan-sen line after aggressively taking a downturn from its 200-period simple moving average (SMA), and finally constructing some footing just shy of the April 29 trough of 1,756. The falling 50- and 100-period SMAs, and their recent bearish crossovers of the 200-period SMA, are enhancing negative pressures.

The recently adopted horizontal bearing of the red Tenkan-sen line is suggesting downside powers have eased, while the falling blue Kijun-sen is defending negative forces. That said, the short-term oscillators are reflecting a pickup in positive momentum. The MACD above its red trigger line continues to hike towards the zero threshold, while the RSI is steering into bullish territory. Furthermore, the positive charge in the stochastic oscillator is promoting price improvements.

If the pickup in buying interest is substantial and drives the price above the 1,800 handle and the adjacent 1,803 barrier, this move could underpin upside momentum. Next constraints to an ascent could arise from the 50-period SMA at 1,817 and the neighbouring Ichimoku cloud. However, recapturing the area above the 1,825 high could raise buyers’ confidence for them to challenge the resistance section of 1,844-1,854.

If the commodity fails to strengthen above the 1,800 level, this may add credence to a deteriorating picture with support commencing around the 1,772 low ahead of the 1,756-1,760 barrier. Should downside risks intensify, the price may sink towards the 1,744 and 1,733 lows respectively, before targeting the base of 1,721-1,724.

Summarizing, gold remains bearish below the SMAs and the 1,825 high. Yet, if the price were to decisively return above the 1,800 mark, this could reinforce bullish confidence.

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