Gold had been experiencing a strong pullback following its recent peak at 1,987, with the price slicing through both its 50- and 200-day simple moving averages (SMAs). Moreover, in today’s session, bullion fell to a fresh five-month bottom as the bulls seem to be staying on the sidelines.
The momentum indicators suggest that the recent decline might be overstretched. Specifically, the RSI is battling with its 30-oversold mark, while the stochastic oscillator has been hovering within its oversold territory for the last 13 days.
If the price manages to stage a comeback, the bulls could initially target the June low of 1,893 ahead of the 1,932 support, which overlaps with the 50-day SMA. Surpassing the latter, gold may ascend to challenge the February high of 1,959. Even higher, the July peak of 1,987 might curb further advances.
On the flipside, should the retreat extend, the March resistance of 1,857 could act as the first line of defense. A violation of that zone could open the door for the 2023 bottom of 1,804. Should that barricade also fail, the spotlight could turn to the November 2022 support of 1,726.
In brief, gold has been undergoing a downside correction, failing to recover some ground despite reaching oversold conditions. Looking forward, bullion’s failure to reclaim the 200-day SMA could induce more downside pressures.
. Moreover, in today’s session, bullion fell to a fresh five-month bottom as the bulls seem to be staying on the sidelines.){kind=link}