Gold Price Forecast: snaps four-week winning streak, support at $1,266 could come into play

Gold is currently trading at $1,282 – down 0.36 percent on the week – its first weekly loss since the second week of December.

Notably, the yellow metal has breached the 10-day-long narrowing price range with the drop to ten-day lows.

A prolonged period of consolidation is usually followed by a big move in the direction of the breakout.

So, the yellow metal could drop sharply next week – more so, because the range breakdown has happened amid signs of bullish exhaustion - bull failure at $1,300 and overbought readings on the RSI.

Daily chart

Contracting triangle breakdown seen in the chart above indicates a short-term bullish-to-bearish trend change.

Validating that argument is the 14-day relative strength, which has rolled over from the overbought levels and could soon drop into bearish territory below 50.00.

The 5- and 10-day MAs have shed bullish bias (no longer sloping upwards).

4-hour chart

The triangle breakdown on the price chart is backed by a similar bearish development on the RSI. More importantly, the indicator has been yet to hit the oversold territory (below 30.00).

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  • Gold could slide to $1,266 (23.6% Fib R of Aug low/Jan high) next week.
  • The immediate bearish view would be aborted if prices rise back above $1,290, although that scenario now looks less likely.

Gold/TRY: Turkish lira is pushing higher against the greenback. Consequently, gold in TRY terms could suffer a bigger drop that gold in USD terms. Interestingly, gold/TRY's 4-hour chart is currently teasing a bear flag breakdown. That pattern is essentially a pause, which ends up accelerating the preceding bearish move more often than not.

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