Gold started the week on the wrong foot, sliding to a low of 1,772 on Monday after two days of unsuccessful efforts to claim the 1,800 psychological mark.
The bearish correction, however, has not raised alarms yet, as the price seems to be setting a foothold around the broken bearish channel from March and the 50-day simple moving average (SMA) at 1,779. The 50% Fibonacci retracement of the 1,878 – 1,680 is also cementing that base. Moreover, the RSI, although weaker, is marginally above its 50 neutral mark and the MACD keeps fluctuating above its red signal line despite recently losing momentum, suggesting a neutral bias instead.
If that floor cracks, the precious metal may seek support somewhere between the 20-day SMA and the 38.2% Fibonacci of 1,756. Lower, the sell-off could accelerate towards the 1,733 – 1,727 constraining zone, a break of which could trigger another significant decline towards the bottom of $1,696 – $1,680.
Otherwise, a bounce on 1,779 may again push for a close above the nearby ceiling of 1,795 – 1,800. Should the bulls succeed this time, the next obstacle could develop within the 1,815 – 1,825 region, while not far above, the flattening 200-day SMA around 1,840 could be a more important resistance.
In brief, gold has not flipped back to a bearish bias despite its latest pullback. For that to happen, the price will need to breach the 1,779 base.
