Gold has been losing ground since early March, generating a profound structure of lower highs and lower lows within a descending channel. Even though bullion recovered some ground after managing to cross above its restrictive trendline in early November, its rebound currently appears to be running out of steam.
The momentum indicators currently suggest that bullish forces are holding the upper hand. Specifically, the RSI has flatlined above its 50-neutral mark, while the stochastic oscillator is ascending near the 80-overbought zone.
To the upside, bullish actions could propel the price towards the recent rejection region of 1,787. Conquering this barricade, the bulls could aim for the August high of 1,807. Piercing through the latter, gold may ascend towards the June peak of 1,880 or higher to test the 1,920 barrier.
Alternatively, if the positive momentum wanes and the price reverses lower, initial support could be met at the recent low of 1,726. Failing to halt there, the commodity could test the 1,702 support before the spotlight turns to the 50-day simple moving average (SMA), currently at 1,688. Even lower, the 1,665 support might provide further downside protection.
Overall, gold’s recovery appears to be on hold for now, but near-term risks remain tilted to the upside. Hence, a break above the 1,787 ceiling is needed to validate the continuation of the short-term uptrend.