Commodities

Technical Analysis – Gold heads lower, hitting 2-week low

Posted on May 27, 2020 at 8:19 am GMT

Melina Deltas, XM Investment Research Desk

Technical Analysis – Gold heads lower, hitting 2-week low

Gold prices are heading lower in the very short-term, penetrating the 100-period simple moving average (SMA) on the 4-hour chart and challenging a new two-week low of 1,705. According to the technical indicators, the RSI is pointing slightly up near the oversold zone, while the MACD is falling below the trigger and zero lines.

In case of steeper decrease the price could move towards the 50.0% Fibonacci retracement level of the upward wave from 1,641 to 1,765 at 1,703 before slipping to the 1,692 barrier. Marginally below this line, the 61.8% Fibonacci of 1,688 is coming into focus, turning the bias to neutral in the medium-term.

On the other side, an advance above the 38.2% Fibonacci of 1,718 and the 100-period SMA could rest near the lower surface of the Ichimoku cloud currently at 1,728 and the 40-period SMA at 1,731. The 23.6% Fibo of 1,736 is the next target for investors to have in mind, which lies slightly beneath the 1,740 resistance.

Summarizing, the yellow metal has been posting lower lows and lower highs over the last ten days, shifting the near-term outlook from bullish to bearish. A drop below the 61.8% Fibo of 1,688 could be the start of a consolidation area in the longer timeframe.

gold

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.