Gold Glides Lower; Has the Summer Lull Taken Over?

Gold is trading lower today, a tad below its 50-day simple moving average (SMA). Gold has actually been on a downward path since the May 4, 2023 high of 2,079 with the bears most likely trying to achieve a new low, below the June 29, 2023 trough of 1,893, and hence continue the recent bearish series of lower lows and lower highs.

The momentum indicators are still mostly on the bears’ side. The RSI is hovering below its midpoint again, and the stochastic oscillator is aggressively moving lower, building a good gap from its moving average. The stochastic appears determined to reach its oversold territory, where it can stay for a while before making a comeback. On the flip side, the Average Directional Movement Index (ADX) seems far less excited with the recent move as it is trading well below its 25-threshold and thus pointing to a trendless market.

Should the bears decide to push the gold price even lower, they would quickly try to break the June 1, 2021 high at the 1,916 level. If successful, they would be able to record a new 5-month low, provided that they overcome the support set by the much busier 1,896 level defined by the 61.8% Fibonacci retracement of March 8, 2022 – September 28, 2022 downtrend and the 200-day SMA respectively.

On the other hand, the bulls are anxiously trying to push Gold above the busy 1,945-1,968 range that is populated by the January 6, 2021 high and the 50-day SMA, and break above the May 4, 2023 downward sloping trendline. They could have the chance of registering a higher high and then set their eyes on a higher prize, the 2,000 threshold.

To sum up, with ample support from momentum indicators the bears are carefully pushing gold lower. However, a more vigorous move is needed to overcome the key support area at 1,916 and gradually open the door for the 1,900 area.