Gold has found significant support on the 23.6% Fibonacci retracement level of the downleg from 1309 to 1160, around 1195, while it started an upward correction after the rebound on 19-month low of 1160. The technical indicators in the 4-hour chart are holding near its neutral levels. The RSI is moving north below the 50 level but the MACD has dropped below its trigger line.
If price action jumps above the 20- and 40-simple moving averages (SMAs), there is scope to test the 1214.15 resistance level, taken from the high on August 28. Clearing this key level would see additional gains towards 38.2% Fibonacci of 1217 and then at the 1220 barrier.
If the 38.2% Fibonacci fails, then the focus would shift to the downside towards the 1183 support level, identified by the low on August 24. If this level is breached, it would increase downside pressures and bring about a continuation of the bearish tendency. From here, the precious metal would be on the path towards the 1172 low.
To conclude, in the daily timeframe the price is hovering within the moving averages, which are creating a negatively aligned channel, while looking at the bigger picture gold recorded five consecutive negative months.
