Commodities

Technical Analysis – Gold declines near 1-month low; loses momentum in near term

Posted on March 4, 2019 at 7:51 am GMT

Melina Deltas, XM Investment Research Desk

Gold had been trading sharply lower over the last three consecutive days, dropping towards a fresh one-month low near 1290 on Friday. The bounce off the ten-month high of 1346.61 drove the market back to the downside, below the 20- and 40-simple moving averages (SMAs), which are both now suggesting a possible bearish retracement in the short-term.

Looking at momentum indicators, the RSI is lacking direction slightly below its neutral threshold of 50, suggesting that the market could keep losing momentum in the near term. The MACD also supports this view in the positive territory, falling below the trigger line.

If the price continues the downfall, support would initially come from the 38.2% Fibonacci retracement level of the upleg from 1160 to 1346.61, around the 1276 barrier. Slipping below this area, the yellow metal could hit the 1250 – 1253 region, which encapsulates the 50.0% Fibonacci mark, shifting the bias to a more neutral picture.

On the other hand, immediate resistance would likely come from the 23.6% Fibonacci of 1302. If there is a successful break above this zone, further resistance could be met around the 40- and then the 20-SMAs currently at 1306 and 1316 respectively. Higher up, the inside swing of February 21 at 1320 could be the next target to look for. Furthermore, if the metal surpasses these obstacles, it could re-challenge the ten-month high.

In the more medium-term picture, the price is still endorsing the bullish view following the upward reversal at the 19-month low of 1160. Only a fall below the 61.8% Fibonacci of 1232 could change this outlook.

commodities gold

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