Gold edged north during the European morning Tuesday, breaking once again above the round figure of 1300. However, the spike was stopped fractionally below the 1307 resistance level and then, the metal retreated somewhat. The rally pushed the price briefly above the downside resistance line taken from the peak of the 11th of April, but the retreat brought it back below that line. Thus, bearing in mind that gold is trading below the aforementioned downside line, but also above a new short-term upside line taken from the low of the 21st of May, we prefer to hold a flat stance for now.
We would like to see a decisive break above 1307 before we get confident that the bulls have cleared the downside line and that they may be willing to aim for higher levels. Such a break could initially pave the way for our next resistance zone of 1317. Another move above 1317 is possible to trigger extensions towards 1322, a resistance marked by the peak of the 14th of May.
Looking at our short-term oscillators, we see that the RSI rebounded from near 50, also near its respective upside support line, while the MACD, although below its trigger line, shows signs of bottoming slightly above zero. It could cross above its trigger line soon. Both these indicators detect positive momentum, but as we already noted, we prefer to wait for a break above 1307 before we start examining whether the short-term picture has turned positive.
On the downside, a clear dip below 1296 could confirm the break below the short-term upside line drawn from the low of the 21st of May and could signal that the bears have taken the driver’s seat. Such a move could see scope for declines towards the 1288 zone, defined by the lows of the 22nd and 23rd of May.
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