Gold prices remain under pressure and risk is still to the downside as prices continue to drift lower from the 1,808 level. The commodity is re-testing the downtrend line that broke at the beginning of the month, signifying a continuation of the descending movement.
The short-term technical indicators are in bearish territory, with the MACD standing below its trigger line; however, the stochastic oscillator is suggesting an oversold market as it is ready to post a bullish cross within its %K and %D lines. Prices are looking capped by the 20 and 40-day simple moving averages (SMAs) which are negatively aligned after a bullish crossover that took place on August 17.
The next target to the downside is the one-year low of 1,681 if there is a move below the downtrend line. At this stage the market would likely see a resumption of the descending view from the 2,070.40 peak and put in place a lower low at 1,640, registered in April 2020.
Upside moves are likely to find resistance at 1,808 but first needs to surpass the SMAs. There is an important resistance zone between the 200-day SMA at 1,840 ahead of the 1,880 resistance.
In the short-term, the bearish phase remains in play especially if gold prices continue to trade below the SMAs.
