Gold staged a strong bounce from the key 1280.00 level last Friday. Near-term upside momentum has been maintained as RSI rose above 50 into bullish territory on the 4-hour chart. Looking back since mid-August, gold has been neutral.
If the top of the range at the key psychological level of 1300.00 can be broken, a clear and sustained move above this resistance would open the way to the next major high at 1337.24 (November 2016 peak).
Until then, consolidation between the range-low of 1280.00 and 1300.00 is expected in the short-term. Gold has failed to record a daily close above 1300.00 since November 4, 2016.
A break below 1280.00 would indicate that the upside risk has diminished. The next support level is expected at 1267.25 which prices reached on August 15 and it was also approached a few times. From here there is scope to reach 1251.49 (August 8 low). This is seen as an important level since it is close to the 50% Fibonacci retracement level of the upleg from 1204.79 to 1300.77. A break of this level would increase downside risk and change the current uptrend from 1204.79 on the 4-hour chart.
Overall, there are no clear signals that would indicate a shift from the current neutral phase. The level at the lower end of the range at 1280.00 is expected to offer solid support and is unlikely to yield so easily in the near-term, while 1300.00 remains a strong resistance level.
