Gold technical analysis: Set-up might have already turned in favor of bearish traders

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Gold technical analysis: Set-up might have already turned in favor of bearish traders

  • Bears challenge a 5-week old ascending trend-line amid risk-on mood.
  • A sustained break below $1500 mark needed for bearish confirmation.

Gold edged lower on the first day of a new trading week, with bears still awaiting a sustained break through the key $1500 psychological mark amid fading safe-haven demand. Renewed optimism over the resumption of the US-China trade negotiations remained supportive of improving global risk sentiment and weighed on traditional safe-haven assets.

This coupled with Friday’s upbeat comments by the Fed Chair Jerome Powell underpinned the USD demand and exerted some additional pressure on the dollar-denominated commodity. Repeated failures to find acceptance above the $1550 region and a subsequent break below 100-hour SMA pivotal point might have already shifted the near-term bias in favor of bearish traders.

A follow-through selling below a near five-week-old ascending trend-line will confirm a bearish breakdown and support prospects for an extension of the recent pullback from multi-year tops. Meanwhile, technical indicators on hourly/daily charts have been gaining bearish traction and add credence to the negative outlook, setting the stage for a further near-term depreciating move.

Below the mentioned $1500 handle, the downward trajectory could accelerate towards intermediate support near the $1486-85 region en-route August 13 swing lows support near the $1477 area. The latter near 50% Fibo. level of the $1400-$1557 recent upsurge and should help limit the downside ahead of the key event risk – the upcoming FOMC monetary policy meeting on September 17-18.

On the flip side, any meaningful recovery attempted might now confront some aggressive supply and remain capped near 23.6% Fibo. level resistance near the $1520 region.

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