Gold had been stuck within a sideways pattern for more than a month, but the bears managed to push the price below the lower boundary of that range. However, gold quickly found its feet and retraced higher, hinting that the decline could prove to be a false breakout.
Despite the latest bounce, the short-term oscillators are not providing positive signs for buyers. The RSI has flatlined way beneath its 50-neutral mark, while the MACD remains below both zero and its red signal line.
Should the bearish near-term structure extend, the price could initially challenge the recent three-month low of 1,893. Sliding beneath that floor, bullion might retreat towards the March resistance of 1,857, which overlaps with the 200-day simple moving average (SMA). A violation of that zone could pave the way for the 2023 bottom of 1,804.
Alternatively, if the price edges higher, the lower end of the rangebound pattern at 1,925 could curb any upside attempts. Conquering this barricade, the bulls could try to pierce through the restrictive trendline that connects the price’s recent highs before they attack the upper boundary of the tight range at 1,985. Further advances may then cease at the crucial 2,000 psychological mark.
Overall, gold seems ready to retest the lower boundary of the rectangle pattern after it managed to halt its decline. A failure to jump above that territory could trigger a significant retreat.
