Gold recoups some losses after strong sell-off

Gold prices experienced a steep bearish move in the preceding week, losing more than 5% from the recent ten-month top of 1,960 and breaking the uptrend line to the downside. The price found a support level near the 50-day simple moving average (SMA) at 1,864, failing to continue the bearish move. The RSI is picking up speed near 50; however, the MACD continues to distance itself below its red signal line.

A reversal to the downside could stall at the 1,825 barrier, before challenging the crucial 200-day SMA at 1,765. Further below, the 1,725 region could also provide support, triggering another sell-off in the longer-term timeframe.

Otherwise, a successful rebound off the 50-day SMA could open the way towards the inside swing peak of 1,895 ahead of the 20-day SMA at 1,914. Higher still, the almost ten-month zenith of 1,960 would increasingly come into scope; not far above this point lies the 2,000 round number as well, shifting the outlook to a more bullish one.

The medium-term picture continues to look predominantly bullish, with trading activity taking place above both the 50- and 200-day SMAs.

Overall, the short-term outlook appears mostly bearish, but the medium-term one remains bullish for the most part.

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).