Gold traded lower yesterday but hit support near the 1320 line and rebounded somewhat. Today, during the European morning, the metal hit resistance slightly below 1327 and slid again. Gold has been trading within a sideways range between 1307 and 1365 since the 2nd of January, and thus we keep a flat stance as far as the broader picture is concerned.
That said, currently the price structure is of lower peaks and lower troughs within that range, and also below the upside support line drawn from back at the low of the 12th of December. Thus, we see a decent likelihood for the metal to continue trading south for a while more. If the bears manage to drive the battle below the key support of 1320, then we may see them aiming for the lower bound of the aforementioned range, at 1307.
Taking a look at our short-term oscillators though, we stay cautious that another corrective rebound may be in the works. The RSI rebounded from near its 30 line, while the MACD, although negative, has bottomed and crossed above its trigger line. What’s more, there is positive divergence between both these indicators and the price action.
A break back above 1327 could confirm the notion and could signal a recovery towards the 1333 area. Nonetheless, even if this is the case, we would still see a decent chance for the bears to jump in from near that zone. We would like to see a decisive move above the 1338 and the upside support line drawn from the low of the 12th of December before we get confident that there is scope for more upside extensions within the broader range.
