Gold Price Forecast: Monthly chart turns bearish
Gold (XAU/USD) prices closed last month at $1,233.81, confirming a revival of the long-term bear market.
Monthly chart
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The pennant breakdown seen in the above chart indicates the rally from the 2015 low of $1046 has ended and the downtrend, which began from the 2012 high of $1,800, has resumed.
The relative strength index (RSI), which pierced the ascending trendline in May, has now found acceptance below 50.00 (in the bearish territory).
The 5-month and 10-month moving averages (MAs) are also biased toward the bears.
As a result, the yellow metal could continue losing its shine for the rest of the year and is seen revisiting the December 2016 low of $1,122 in early 2018.
While the long-term outlook has turned bearish, in the short-term a minor corrective rally cannot be ruled out as the metal looks oversold as per the daily chart indicators.
Daily chart
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The large bullish divergence of the relative strength index (RSI) favors a stronger corrective rally towards the downward sloping 5-month, currently located at $1,260. Such a move might create an impression that the long-term bearish breakdown has failed, however, it could be a temporary move aimed at crowding out weak hands (bears with limited risk appetite).
Only a monthly close above the 10-month MA, currently located at $1,287, would invalidate the monthly chart pennant breakdown.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
