- Gold extended the previous day’s post-FOMC retracement from two-week lows.
- The formation of a descending triangle supports prospects for additional weakness.
- Neutral oscillators warrant some caution before placing aggressive directional bets.
Gold added to its intraday losses and dropped to over one-week lows, around the $1932 region during the early North American session.
Given the previous day’s failed attempt to make it through a near one-month-old descending trend-line, the subsequent weakness points to the emergence of some fresh selling pressure. The mentioned trend-line, along with a strong horizontal support near the $1900 mark constitutes the formation of a descending triangle.
The set-up seems tilted firmly in favour of bearish traders and supports prospects for a further near-term depreciating move. However, neutral technical indicators on the daily chart haven’t been supportive of any firm direction. This, in turn, warrants some caution before placing any aggressive bearish bets.
That said, the commodity still seems vulnerable to slide further towards the $1920-15 intermediate support before eventually dropping back to the $1900 strong support. Some follow-through selling will be seen as a fresh trigger for bearish traders and accelerate the fall towards August monthly swing lows, around the $1863-62 region.
On the flip side, immediate resistance is now pegged near the $1956-58 region. Above the mentioned hurdle, the commodity is likely to make a fresh attempt to clear an important barrier near the $1972-74 region (descending trend-line). Bulls might then push the commodity beyond the key $2000 psychological mark, towards the next major hurdle near the $2015 horizontal level.
Gold daily chart
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Technical levels to watch
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