Gold remains confined in a narrow trading range, around the $1950 region.
The price action now seemed to constitute the formation of a bearish triangle.
Sustained weakness below $1900 is needed to confirm the negative outlook.
Gold extended its sideways/directionless price action through the early North American session and remained confined in a range, around the $1948-50 confluence region. The mentioned area comprises of 200-hour SMA and the 38.2% Fibonacci level of the $2075-$1863 corrective fall.
The commodity has been attracting some dip-buying ahead of the $1900 mark over the past one month or so. However, any attempted positive move has been capped near a resistance marked by a near one-month-old downward sloping trend-line. The combination of horizontal support and trend-line resistance constitute the formation of a descending triangle on short-term charts.
The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern, supporting prospects for the resumption of the recent corrective slide from record highs. That said, neutral technical indicators on hourly/daily charts haven’t been supportive of any firm direction and thus, warrant some caution before placing fresh directional bets.
Bearish traders are likely to wait for a convincing break through the $1910-05 horizontal support, below which the commodity is likely to slide back towards the August monthly swing lows, around the $1863 region. Conversely, a sustained strength beyond the $1970 level (50% Fibo. level and descending trend-line) will be seen as a fresh trigger for bullish traders.
The yellow metal might then aim to reclaim the key $2000 psychological mark and climb further towards the $2016-17 resistance zone. Some follow-through buying will set the stage for a move back towards record highs, around the $2075 region, set on August 7.
Gold 1-hourly chart
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Technical levels to watch
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