- Gold surrenders early gains and drifts back closer to two-week lows.
- The set-up favours bearish traders and points to further weakness.
Gold failed to capitalize on the early attempted positive move and has now drifted to the lower end of its daily trading range, well within the striking distance of two-week lows set on Tuesday.
Given the commodity’s recent pullback from multi-year tops and a subsequent break through the key 100-day SMA support, the near-term technical set-up remains firmly in favour of bearish traders.
This coupled with the fact that the yellow metal has been trending lower along a descending trend-channel formation over the past two months or so further adds credence to the negative outlook.
Meanwhile, oscillators on the daily chart maintained their bearish bias and have been struggling to recover from the negative territory on hourly charts, suggesting an extension of the recent downfall.
Hence, some follow-through selling has the potential to drag the metal back towards monthly lows support around the $1445 region, also marking the lower end of the mentioned trend-channel.
On the flip side, the $1463 region (weekly tops) now seems to have emerged as an immediate resistance, above which the metal is likely to aim towards testing the $1472-73 horizontal resistance.
The momentum could further get extended, though seems more likely to remain capped and fizzle out rather quickly near 100-day SMA support-turned-resistance, currently near the $1487-88 region.
Gold daily chart