Technical Analysis – Gold stays within bearish channel

Gold was trading with a muted tone during Monday's early European trading hours at $1,774 following the pullback near the 50-day simple moving (SMA) and the surface of the downward-sloping channel last Friday.

The latest decline raised concerns about whether a new downturn will start within the bearish channel, but the momentum indicators have yet to clarify this. Although losing steam, the RSI is still above its 50 neutral mark, while the MACD remains attached around zero and marginally above its red signal line, both reflecting a neutral short-term bias instead.

Should selling pressures resurface, the $1,765 - $1,755 region could again come immediately to the rescue. If it fails to block the way down, the spotlight will turn to the 20-day SMA at $1,738, while lower, the bears will aim to breach the $1,711 restrictive region in order to meet the one-year low of $1,680.

Alternatively, the bulls may retry to raise their fortune above the channel’s upper boundary and the 50-day SMA at $1,786. If they succeed this time, buying interest could grow towards the $1,810 - $1,825 zone. The 200-day SMA at $1,842 could be a more critical target.

In brief, despite Friday’s failure to exit the bearish channel, gold has yet to motivate selling practices. A break below $1,758 could make a downside reversal more likely.

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.