Gold is currently trading at $1,271, the lowest level since Dec. 27.
The drop to 3.5-month lows bolsters the already bearish technical setup on the daily chart.
The metal, therefore, appears on track to test support at $1,263 (trendline rising from August and November lows), albeit after a minor bounce, as the 4-hour chart relative strength (RSI) looks to be creating a higher low (bullish divergence).
- As seen above, the latest 3.5-month low on price isn’t confirmed by the RSI, which could end up creating a higher low if price sees a minor bounce.
- The bullish divergence, if confirmed, would open the doors for a minor bounce to $1,280.
Trend: Minor bounce likely