Commodities

Technical Analysis – Gold edges south after bounce off 5-month low

Posted on December 9, 2020 at 7:29 am GMT

Melina Deltas, XM Investment Research Desk

Gold prices rebounded from the five-month low of 1,764 at the end of November, taking the price above the short-term simple moving averages (SMAs), though, the metal is currently retreating.

The RSI indicator is heading down after it touches the overbought territory, suggesting a downside pullback, while the stochastic oscillator is dipping, approaching the bearish zone. However, the red Tenkan-sen line is holding above the blue Kijun-sen line, indicating more gains.

If there is an advance above the latest high, immediate resistance could come from the 1,880 barrier before managing to challenge the 1,900 psychological number. Breaching these obstacles, the bulls could move until the 1,935 hurdle.

On the flip side, the first support is the 23.6% Fibonacci retracement level of the up leg from 1,764 to 1,875 at 1,849, which holds marginally below the 20-period SMA. Beneath the latter, the 100-period SMA currently at 1,838 could next come in spotlight, while not too far behind are the 38.2% Fibonacci of 1,832 and the 40-period SMA. More losses could take the bears until the 50.0% Fibonacci at 1,819 and the 61.8% Fibonacci at 1,807.

Concluding, the yellow metal has been in an upside retracement in the very short-term, while in the broader outlook the price has been in a bearish tendency since August 07.

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.