Gold spiked up today, after finding support once again near the 1,660 zone yesterday. Although some further recovery may be on the cards, the precious metal remains in a downtrend and this is supported by the fact that it is trading below a downside line drawn from the high of August 10, as well as below all three of the plotted moving averages.
The short-term oscillators detect diminishing downside speed and add to the idea of some further recovery before the next leg south. The RSI appears ready to poke its nose above its equilibrium 50 line, while the MACD, although negative, has crossed above its trigger line.
The bears may recharge from near the 1681 barrier or from slightly higher at 1,690, a resistance marked by the inside swing low of September 1. If so, a slide and a break below 1,660 may occur, which could result in another test at the 29-month low of 1,654 hit on Friday, or near the 1,640 hurdle. If the latter zone doesn’t hold, then a larger slide may be on the cards, perhaps towards the low of April 6, 2020, at 1,605, which coincides with the 161.8% Fibonacci extension level of the July 21 – August 10 recovery.
On the upside, the move signaling that the bulls have stolen all the bears’ weapons may be a break above 1,707, the September 14 high. This could validate the break above the downside line and may pave the way towards the 1,730 territory, the break of which could see scope for extensions towards the August 29 high at 1,745.
Wrapping up, gold rebounded again from the 1,660 key support but even if it continues a bit higher, as long as it is trading below a downtrend line and all the moving averages, the broader picture remains negative.
