Gold started an aggressive bearish roller coaster over the previous three weeks, creating a fresh six-month low of 1245.84 last Thursday. The price is developing near the aforementioned low and the short-term technical indicators are pointing to more weakness in the market.
Looking at the at the 4-hour chart, gold prices are looking capped by the 20 and 40-simple moving averages (SMAs) which are negatively aligned after a bearish crossover that took place on June 15. The Relative Strength Index (RSI) is heading lower towards the threshold of 30, while the stochastic oscillator is moving lower.
Should prices continue the bearish movement, immediate support could come at the 50.0% Fibonacci retracement level of 1243.8 of the upleg from 1122 to 1366, which stands near the return line of the descending channel. A drop below this area would take the yellow metal to the 1236 support, taken from the low on December 2017.
To the downside, there is resistance just below the 1261, where the 40-SMAs stands at 1258.8, while above that, the next major resistance to watch is the 1272.5, which coincides with the 38.2% Fibonacci level.
Overall, the yellow metal has been developing within a downward sloping channel since April 11, indicating that the price remains in bearish mode in the long term.
