Gold slid to a seven-week low of 1,818 last Friday before closing narrowly back above the 1,835 support for the third consecutive day.
The precious metal was trying to extend its minor gains above the 1,835 base during Monday’s early trading hours. But excluding the upside reversal in the Stochastic oscillator, the RSI and the MACD did not show any meaningful reaction, with the former remaining below its 50 neutral mark and the latter hovering within the negative area and near its previous lows. With the price having exited the bullish channel, retreating below the 50-day simple moving average (SMA) too, sellers will probably keep the upper hand in the short term.
Should the price close below the former 1,835 support area, all eyes will turn to the 1,800 psychological mark as another defeat here would neutralize the broad outlook. A continuation lower could challenge the flattening 200-day SMA at 1,775, a break of which could initially pause around 1,750 before stretching towards the 1,725 low from November 23.
In the event the recovery gains fresh impetus above the upper boundary of the tight bearish short-term channel at 1,845, the door will open for the 50-day SMA at 1,862. A successful move higher could then face strong resistance around the 1,885 region, where the 20-day SMA and the lower band of the broken bullish channel are converging. The 1,900 round level could be the next target.
In a nutshell, gold’s short-term outlook has deteriorated following last week’s channel breakout. The technical signals are not very encouraging at the moment, though a close above 1,845 could allow for some extra recovery.