Gold resumed its bearish momentum early on Monday after Friday’s rebound off a 29-month low of 1,653 faded immediately around the previous low of 1,680. Strikingly, the latter overlaps with the 200-weekly moving average (SMA), which has been out of sight since the end of 2018.
In technical indicators, the bearish cross within the 20- and 50-day SMAs is endorsing the negative trend in the market. Meanwhile, the MACD is set for another downside extension below its red signal and zero lines, while the RSI and the stochastics, although close to their oversold levels, have yet to change direction northwards, all keeping the bias on the bearish side for now.
If the 1,680 resistance stands firm, the precious metal could slide towards the 1,640 barrier from February-April 2020. Breaking lower, the 1,600 psychological mark may attract special attention in fear that any violation at this point could quickly sink the price to the bottom of the bearish channel seen around 1,540.
Alternatively, a close above the 1,680-1,690 constraining zone could stage a new battle near the 20-day SMA currently at 1,712. Running higher, the price may next attempt to breach the 50-day SMA at 1,735 and successfully pierce the channel’s upper band at 1,750. Note that a former restrictive line is also passing through this area.
Summarizing, gold remains exposed to additional declines as the price is fighting a critical support-turned-resistance zone at 1,680. If the bulls cannot knock down that wall, the bears may further worsen the already dim outlook.
