Gold is neutral after stabilizing from a recent drop, but risk is tilted to the downside in the short term. On the 4-hour chart, oscillators are neutral to bearish.
The market appears to have found near-term support in the lower 1265 area, just above the October 6 low of 1260.59. Any moves to the upside would target key Fibonacci levels of the 23.6%, 38.2% and 50% retracement from 1357.47 to 1260.59. These levels come in at 1283.16, 1297.54 and 1308.91 respectively.
The recent consolidation phase is currently trapped below the 23.6% Fibonacci and is keeping the bearish trend in progress since the decline from 1357.47. A break below 1260.59 would bring a resumption of the downtrend from the multi-month peak.
However, a prolonged consolidation would lead to further loss of momentum and the market’s focus could shift back to the upside. A move above the 50% Fibonacci would indicate the bearish phase has ended. From here, the odds would increase for a test of 1357.47 and gold would see a reversal in the short-term bearish trend.
