Technical Analysis – Gold builds base below 1290; neutral in short-term

Melina Deltas, XM Investment Research Desk

Gold prices have been developing within a consolidation area over the last month, with upper boundary the 1290 resistance level and lower boundary the 1266 barrier. Currently, the price hovers beneath the 23.6% Fibonacci retracement level of the downleg from 1346.60 to 1266, around 1285 as well as between the 20- and 40-simple moving averages (SMAs).

From the technical point of view, in the 4-hour chart the stochastic oscillator is turning lower, while the RSI and the MACD are pointing down below 50 and the trigger line respectively, suggesting a possible negative movement.

If the market reverses even lower, immediate support could come from the 1279 support level, taken from the latest lows. A sharper bearish structure could send the yellow metal until the lower boundary of the sideways channel, to the four-month low of 1266.

Otherwise, the price could retest the 23.6% Fibonacci of 1285 before moving near the 1290 resistance. A jump above the latter would end the consolidation phase, opening the way towards the 38.2% Fibonacci of 1297.

Summarizing, if the price continues to trade within the consolidation area in the near term, investors could be on hold until a break above 1290 or below 1266.