Gold Holds Bearish Bias In Short And Medium Term, Downside Risk Remains High

Gold holds a bearish bias both in short and medium-term time frames. The market is continuing its downward trajectory from the September 8 high of 1357.47 with little indication of stopping. Trend indicators and momentum oscillators are suggesting that risk remains to the downside.

Studies on the 4-hour chart show a bearish crossover of the 20 and 50-period moving averages that took place on September 13. The negative alignment and sharp slope down of both moving averages point to deeper declines. The next target to the downside is at 1262.25 ahead of the August 8 low of 1251.49. From this point, downside momentum would strengthen and open the way towards the July 7 low of 1204.79.

The RSI indicator on the 4-hour chart is approaching oversold levels at 30 which could suggest that downward pressure may ease for now. Should gold prices bounce higher and rise above 1280, then 1300 would come into view. Any further rise from this pivotal level would shift focus to the upside towards 1315 and then from here, 1342 is expected to be an important barrier. Only a move above the 1354.47 peak would help increase upside momentum to bring about a resumption of the uptrend that started from 1204.79.

The short-term trend is expected to remain bearish as long as the market is capped by the 20-period MA and unless gold prices can reclaim the 1300 handle soon.