Gold prices pared some gains on Monday, following the new five-month high of 1250.44 that was achieved in the preceding week. The yellow metal holds above the 20- and 40-simple moving averages (SMAs) in the 4-hour chart, however, the momentum indicators are turning lower. The RSI indicator is pointing down after hitting the overbought zone, while the %K line of the stochastic oscillator posted a bearish crossover with the %D line.
A bearish correction would drive prices until the 1243 support level, taken from the high on October 26. Then the price could challenge the 20- and the 40-SMA at 1240.85 and 1235.35 respectively. If the market fails to hold above these levels, the yellow metal could meet support at 1233, where it bottomed on December 5.
On the flipside, more upside movements could send prices towards the immediate resistance of the five-month high of 1250.44, while even higher the area around 1260.00 – 1265.60 could attract attention as well.
Concluding, gold prices remain above the rising trend line, which has been holding since August 16 and is trying to post significant gains in the short-term.
