Gold prices plummeted to a fresh five-month low of 1,764.34 earlier today, reaching the 50.0% Fibonacci retracement level of the up leg from 1,451 to 2,074.89. Currently, the market is still developing within a downward sloping channel since it hit a record high at 2,074.89.
According to the RSI, the negative momentum is continuing as it is holding in the oversold zone and is pointing south. However, the stochastic oscillator created a bullish crossover within its %K and %D lines below the 20 level. Moreover, the metal is hovering below the bearish cross of the 20- and 40-day simple moving averages (SMAs).
In the event of a tumble below 1,763, the 1,704 support may ease selling pressure, which stands marginally above the 61.8% Fibonacci of 1,690 and the 1,667 barrier. Failure to bounce off the latter, could bring the 1,566 level, taken from the low on April 1, into view.
In the bigger picture, the market continues to print lower lows and lower highs, holding the bearish outlook intact. A jump above the previous peak of 1,965 would disturb the downward pattern shifting the outlook to neutral.
Summarizing, the yellow metal has a potential to lose more ground. A drop below the five-month low of 1,764.34 is expected to trigger the next downside move.