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  • Gold witnessed some follow-through selling for the fourth consecutive session on Thursday.
  • Oversold conditions on the 4-hourly chart helped bulls to defend 100-DMA, at least for now.
  • The set-up favours bearish traders and supports prospects for further near-term weakness.

Gold extended this week’s bearish breakdown momentum through a descending triangle support near the $1900 mark and dropped to two-month lows, around the $1850 region on Thursday.

The downfall, marking the fourth consecutive day of a negative move, stalled just ahead of 100-day SMA support. The commodity now seems to have entered a bearish consolidation phase and was seen oscillating in a range through the early North American session.

Given the overnight break through the 50% Fibonacci level of the $1671-$2075 positive move and a subsequent fall below August monthly swing lows, the near-term bias still seems tilted in favour of bearish traders and supports prospects for further weakness.

Meanwhile, bearish oscillators on the daily chart are still far from being in the oversold territory and add credence to the negative outlook. However, oversold conditions on the 4-hourly chart extended some support to the yellow metal and helped limit deeper losses.

That said, any attempted recovery might still be seen as a selling opportunity and run out of the steam rather quickly near the $1870-72 region (50% Fibo. level). Above the mentioned barrier, a bout of short-covering move could push the commodity back above the $1900 mark.

On the flip side, the 100-day SMA, around the $1845 region, might protect the immediate downside. Some follow-through selling might turn the commodity vulnerable to accelerate the downward trajectory further towards the 61.8% Fibo. level support near the $1825 region.

Gold daily chart

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Technial levels to watch