Technical Analysis – Gold bearish in short-term; remains vulnerable but immediate downside pressure eases for now

Gold has turned increasingly bearish and has shifted out of a range in which it has been trading in since early October. Prices broke below the 1270-1300 range to trade under 1250 since last Thursday.

On the 4-hour time frame, there was a bearish crossover of the 50 and 200-period moving averages. RSI has dipped into bearish territory and is slowly moving out of oversold levels. Gold prices are entering a consolidation phase due to the oversold conditions.

Immediate resistance is at 1250 which is currently being tested and could be quite a challenge to breach. A sustained break off this level could push prices towards the key 1260 area and then to the bottom of the recent range at 1270 with scope to re-enter the medium-term neutral phase.

Near-term support is expected between the 1243.48 low and 1247. Risk is tilted to the downside and there is potential for additional weakness for a move towards the 1235 area which was previously tested as support. From here a decline below 1230 cannot be ruled out.

The multi-month trend is bearish and the market remains vulnerable. But in the near term, congestion is expected to remain just below the 1250 area and above the 4-month low. Price action is soft but downside pressure is muted for now.