- Gold keeps the red for the third day in the row amid quiet markets.
- Year-end flows and Treasury yields’ price action will lead the way.
- Gold’s technical setup paints a bearish picture on the 4H chart.
Amid thin year-end liquidity conditions, gold price witnessed volatile trading on Wednesday, falling sharply to $1,790 on a breach of the $1,800 mark. Bulls, however, jumped back into the game and prompted an impressive bounce, as gold price finished at $1,804. Gold price remained under pressure all through the day, courtesy of a rebound in the US Treasury yields following a weak auction of the seven-year rates. Meanwhile, the 70th record close in the US stocks this year combined with easing Omicron fears and outflows from the Treasuries exacerbated the pain in the bright metal. However, the slump in the US dollar to fresh weekly lows, in response to the year-end position adjustments, aided the late rebound in gold price.
In Thursday’s trading so far, gold price is extending the previous bearish momentum, as the Treasury yields hold the recent advance. Meanwhile, the market mood remains cautious, underpinning the dollar’s safe-haven demand at gold’s expense. Investors have moved past the Omicron uncertainty, as the end of the year flows will continue to remain the main driver for gold price alongside the yields in the last couple of trading days of this year. The US Jobless Claims and other minority reports will offer some trading incentives to gold traders.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
Gold’s four-hour chart shows that bulls lost the recovery battle after facing stiff resistance just below the mildly bearish 21-Simple Moving Average (SMA) at $1,807.
The sell-off that ensued knocked down gold price below the critical 200-SMA and 50-SMA, which converge at $1,802, as of writing.
Gold price is extending the recent losses, with bears looking to retest the ascending 100-SMA support at $1,792.
The next downside target is seen at the horizontal trendline support at $1,785. The Relative Strength Index (RSI) points south below the central line, allowing more declines.
Therefore, gold price is seen defending the horizontal 200-Simple Moving Average (SMA) at $1,805, as of writing.
On the upside, bulls need to recapture the 50 and 200-SMAs confluence area, above which the 21-SMA will come into play.
Recapturing the latter is critical to resuming the uptrend towards the monthly highs of $1,820
Ahead of that level, the previous stubborn resistance at $1,814 will challenge the bulls’ commitments once again.
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