Gold spiked to a fresh six-year high of 1,453 on Friday after closing above the 50% Fibonacci of the three-year old downleg from 1,796 to 1,046, but the market could not sustain the gains, with the price pulling back near the Fibonacci level.
Meanwhile in momentum indicators, the MACD failed to pierce its red signal line last week, while the RSI continues to fluctuate sideways in the bullish area, both suggesting a neutral-to-bearish bias for the short-term. The slowdown in the 20-day simple moving average is also an indication of softness.
Should the price slip below the 50% Fibo of 1,421, the 1,400 round-level could provide nearby support ahead of the 1,382 number. Clearing the latter and therefore the lower band of the recent range, the sell-off could pick up steam towards the key 1,365-1,356 former resistance area.
Alternatively, if the 50% Fibo proves a tough obstacle to penetrate and the price rebounds back above 1,438, the focus will shift back to the upside and towards the 1,453 top. Moving even higher, the next important resistance to watch could be detected between the 61.8% Fibonacci of 1,500 and the 1,522 level – a stronger barrier during the 2011-2012 period.
In the medium-term picture, gold is in a strongly bullish mode. A drop under 1,337 would shift the sentiment back to neutral, though, with the 50-day SMA deviating sharply above the 200-day SMA, chances for such a move are currently seen as minimal.
In brief, gold is likely to face a neutral-to-bearish session in the short-term, while in the medium-term the risk remains to the upside.