Gold started the week on the wrong foot, drifting below the $1,900 level on Monday after hitting a wall around the 50-day simple moving average (SMA) at $1,934.
More importantly, the precious metal closed clearly below the tough support of $1,915 after almost two months of consolidation, raising the stakes for additional declines in the coming sessions. The technical indicators back this narrative too as the RSI has slumped below its 50 neutral mark and the MACD has slipped below zero.
Encouragingly, there is another floor at $1,890, and with the Stochastics positioned in the oversold territory, an upside reversal or some stabilization cannot be ruled out. In case sellers persist, the $1,870 area, which includes the 61.8% Fibonacci retracement of the $1,780 – $2,070 upleg, will be critical for a broad outlook deterioration. Another losing battle here is expected to press the price towards the 78.6% Fibonacci of $1,840 and the 200-day, while lower, all eyes will turn to the area of trendlines at $1,812 –$1,800.
On the upside, the 50-day SMA currently at $1,936 will remain in scope. A break above this line is expected to provide access to the 38.2% Fibonacci of $1,959. Running higher, the price will push harder to claim the crucial $2,000 level, and if efforts prove successful this time, the door will open for the all-time high of $2,079.
In brief, gold is in a bearish situation for another week. Unless it maintains the base at $1,890, expectations are for a continuation to the downside, which could consequently ruin the 2022 pattern of higher highs.
