Gold struggles to extend declines after hitting a floor at 1,920

Gold prices are continuing last week’s move around the key level of 1,920, which is the 38.2% Fibonacci retracement level of the up leg from 1.680 to 2,070.40 and at the same time is confirming the pullback from the 1,950 resistance and the 20-day simple moving average (SMA).

The short-term bias looks negative as the MACD keeps losing ground below its red signal line, while the RSI seems to be making its way near its 50-neutral mark, though a further decline is needed from both indicators to confirm the negative momentum.

The 1,895 support and the 40-day SMA currently at 1,890 could be a trigger point for steeper bearish action if the pair manages to break the 38.2% Fibonacci. Lower, support could come towards from the 50.0% Fibonacci at 1,877, a strong barrier last year, though more sellers could take the price until the 1,853 key level, which stands slightly above the uptrend line.

However, if the pair reverses back to the upside, investors could watch first the 1,950 resistance and then the 23.6% Fibonacci of 1,978, which overlaps with the red Tenkan-sen line of the Ichimoku indicator. If the price continues to rise, resistance could next come somewhere near the 19-month high of 2,070.40.In the short-term picture, the pullback off the multi-month high turned the strongly bullish outlook to negative.However, in the bigger picture, chances for another bullish move are still rising as the yellow metal is still holding above the ascending trend 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).

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