Commodities

Gold bounces off 1-year low but retains bearish outlook

Gold has been experiencing a sustained downtrend since early March, generating a profound structure of lower highs and lower lows. Although the precious metal managed to cease its decline at the one-year low of 1,681 and recoup some losses, its bearish technical picture remains intact.

The momentum indicators reflect a cautiously positive near-term bias. Specifically, the stochastic oscillator is sloping upwards towards its 80-overbought zone, while the MACD has crossed above its red signal line but remains in the negative territory.

Should buying interest intensify further, the price may encounter initial resistance at the 1,755 barrier. Any further advances could then stall at the May support of 1,787 before the 1,880 peak appears on the radar. An upside violation of the latter could open the door for the 2,000 psychological mark.

On the flipside, should the decline resume, the one-year low of 1,681 might act as the first line of defense. Breaching this zone, the spotlight could turn to 1,640, which acted  both as support and resistance in April 2020. Failing to halt there, the bears might then aim for the March 2020 support of 1,570.

Overall, even though the market is trying to push for some recovery in the past few daily sessions, gold maintains both its bearish short- and long-term outlooks. For the former to alter, the price needs to decisively cross above the 1,880 ceiling.

About the author

Melina Deltas

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups. Her technically focused method looks mainly at price action across multiple time frames to capture big moves that develop over the years. She has more than 3 years of experience in analyzing financial markets, specializing in forex, indices, and commodities. Melina studied Pure Mathematics at Lancaster University and has a Master's Degree in Monetary and Financial Economics from the University of Cyprus. Currently, she is an associate member of the Society of Technical Analysts (STA) and a Certified Financial Technician (CFTe).