XAU/USD tumbled on Wednesday, after the Fed signaled that interest rates in the US could start rising in 2023. The free fall continued yesterday as well, with the metal hitting support at 1767, a territory which offered strong support between Apr. 19 and May 3.
Thereafter, gold rebounded and today it looks to be headed towards Wednesday’s low of 1804. Overall, the metal is trading well below the prior upside support line drawn from the low of Mar. 31, and also well below a newly established downside line, taken from the high of June 1. Therefore, we would consider the near-term outlook to be bearish.
If the bears are strong enough to take charge again from near the 1804 area, we could see another leg south towards the 1767 support zone. That said, we would like to see a move below that key obstacle before we get confident on more declines. Such a move would confirm a forthcoming lower low and may initially target the inside swing high of Apr. 14 at 1750. Another dip, below 1750, could extend the slide towards the low of that day, at 1733.
Looking at our short-term oscillators, we see that the RSI rebounded and just poked its nose above its 30 line, while the MACD, although below both its zero and trigger lines, shows signs of turning up as well. Both indicators detect slowing downside speed and support the case for some further recovery before the next leg south, perhaps for a test near 1804.
Now, in order to start examining whether the upside correction will last longer, we would like to see a move above 1825, a resistance marked by yesterday’s high. The next hurdle may be the inside swing low of June 14, at 1825, the break of which could pave the way towards the peak of the day after, at around 1869.