Gold Forecast: Eyes 38.2% Fib of Dec-Jan rally
Gold is trading at $1335 levels - down 2.27 percent from the monthly high of $1366. The technical charts indicate scope for a drop to $1316 over the next week, while bull revival is seen above the previous day's high of $1352.40.
Patterns on the Daily chart
- A downside break of the rising channel.
- Bearish price RSI divergence.
- 5-day MA has adopted bearish bias, 10-day MA is neutral.
Bears are likely gaining an upper hand as shown in the above chart and prices look set to test $1316 - 38.2% Fib R of Dec-Jan rally.
However, the RSI on the 1-hour has hit the overbought territory, while prices seem to be finding support at $1335.49 (4-hour 100-MA + 23.6% Fib R of Dec-Jan rally). Gold may develop bullish price-RSI divergence on the 1-hour chart, if prices rebound from $1335.49, in which case, the buyers may chip-in, pushing the metal higher towards $1352.40 (previous day's high). Only a daily close above $1352.40 would revive the bullish outlook.
That said, the 5-MA and 10-MA are trending lower on the 4-hour chart. So, it is likely that (potential) rebound from $1335.49 could be transient. Moreover, a rebound from $1335.49 could yield sustained rally only after the 5-MA and 10-MA (4-hr) regain bullish bias (bottomed out). So, traders need to keep an eye on the 4-hour chart.
Also, a slide to $1316 could be short-lived as equities will likely turn risk-averse once the 10-year UST yield rises above 2.76 percent, boosting demand for the safe haven yellow metal.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
