Technical Analysis – Gold heads lower, hitting 2-week low

Melina Deltas, XM Investment Research Desk

Gold prices are heading lower in the very short-term, penetrating the 100-period simple moving average (SMA) on the 4-hour chart and challenging a new two-week low of 1,705. According to the technical indicators, the RSI is pointing slightly up near the oversold zone, while the MACD is falling below the trigger and zero lines.

In case of steeper decrease the price could move towards the 50.0% Fibonacci retracement level of the upward wave from 1,641 to 1,765 at 1,703 before slipping to the 1,692 barrier. Marginally below this line, the 61.8% Fibonacci of 1,688 is coming into focus, turning the bias to neutral in the medium-term.

On the other side, an advance above the 38.2% Fibonacci of 1,718 and the 100-period SMA could rest near the lower surface of the Ichimoku cloud currently at 1,728 and the 40-period SMA at 1,731. The 23.6% Fibo of 1,736 is the next target for investors to have in mind, which lies slightly beneath the 1,740 resistance.

Summarizing, the yellow metal has been posting lower lows and lower highs over the last ten days, shifting the near-term outlook from bullish to bearish. A drop below the 61.8% Fibo of 1,688 could be the start of a consolidation area in the longer timeframe.