Fri, Jun 24, 2022 @ 22:55 GMT
HomeContributorsTechnical AnalysisGold Has Turned Increasingly Bearish After Retreating From 1-Year Highs

Gold Has Turned Increasingly Bearish After Retreating From 1-Year Highs

Gold has turned increasingly bearish in the short term after the 50-period moving average fell below the 20-period MA last week. Momentum oscillators on the 4-hour chart are giving bearish signals.

After rallying to a more than a 1-year high of 1357.47 on September 8, the rally lost steam as the market became overextended. This was indicated by RSI rising above 70 into overbought territory. Gold prices failed to sustain gains at these levels and consequently fell below an important support level at 1342.68 and the market has been carving out lower highs and lower lows since the 1357.47 peak.

Momentum oscillators are now bearish, with RSI below 50 and MACD below zero, thereby increasing the risk to the downside. The focus has shifted to the key 1300 level which is expected to provide support. From here, prices could target the 1280 level which is the 50% Fibonacci retracement level of the uptrend from 1204.79 to 1357.47 (July 10-September 8). A move lower would increase the bearish view and result in a reversal of the July to September uptrend.

Not much damage has been done to the medium-term bullish market structure but gold prices are expected to stay under pressure in the near-term unless they can reclaim and stay above the 1335 area. Such a move would increase the odds for a re-test of the 1357.47 peak and bring a resumption of the uptrend. For now, the near-term bearish bias is expected to remain.

XM is a fully regulated next-generation financial services provider of online trading on currency exchange, commodities, equity indices, precious metals and energies, with services to clients from over 196 countries worldwide. Founded in 2009 by market experts with extensive knowledge of the global forex and capital markets and with the aim to ensure fair and reliable trading conditions for every client, XM has reached international recognition by virtue of its unbeatable execution of orders, spreads as low as zero pips on over 50 currency pairs, gold and silver, flexible leverage up to 888:1, and personalized customer engagement to foster clients’ success.

Featured Analysis

Learn Forex Trading