Gold remains under pressure; broader trend is bearish

Gold remains under pressure and risk is still to the downside as prices continue to drift lower from the long-term descending trend line. The technical indicators are bearish and point to more weakness in the market.

Looking at the daily chart, gold prices are looking capped by the 20 and 50-day simple moving averages which are negatively aligned after a bearish crossover that took place in the preceding week. The RSI indicator is ticking lower in the bearish territory; however, the MACD is trying to overcome its trigger line in the negative region.

The next target to the downside is the one-year low of 1,681. At this stage, the market would likely see a resumption of the downtrend from the 20-month peak of 2,070.40 and put in place a lower low at 1,640 registered in April 2020.

Upside moves are likely to find resistance at the 1,730 barrier, which overlaps with the 20-day SMA. There is an important resistance zone between the 40-day SMA at 1,744 and the downtrend line around 1,755. Rising above this area would help shift the focus to the upside towards 1,808. Breaking this level could see a re-test of the 200-day SMA at 1,833 and turn the bias to bullish.

In the short- and long-term timeframes, the bearish phase remains in play, especially if gold prices continue to trade below the downtrend line and the 200-day SMA. 

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).