Gold Price Analysis: XAU/USD remains vulnerable, bearish flag spotted on short-term charts

  • Gold gained some positive traction on Thursday, albeit lacked any strong follow-through.
  • The recent bounce along an ascending channel constitutes the formation of a bearish flag.
  • A sustained break below 200-day SMA is needed to confirm a fresh bearish breakdown.

Gold traded with a positive bias through the major part of the European trading session, albeit lacked any strong follow-through buying. The precious metal was last seen trading just below the $1815 level, up around 0.30% for the day.

The recent bounce from the vicinity of the very important 200-day SMA, around the $1800 mark, has been along an upward sloping channel. Given the recent sharp fall, the mentioned channel constitutes the formation of a bearish flag pattern.

The negative set-up is further reinforced by bearish technical indicators on the daily chart. This, coupled with the fact that oscillators on hourly charts have recovered from the oversold territory, supports prospects for further weakness. That said, bearish traders might wait for a sustained breakthrough the flag support, around the $1805 area.

A subsequent fall below 200-day SMA, currently near the $1798 region, will be seen as a fresh trigger for bearish traders. The XAU/USD might then accelerate the downward trajectory towards the $1763 region. The latter marks the 50% Fibonacci level of the $1451-$2075 positive move, which should act as a strong base and help limit the downside.

On the flip side, some follow-through strength beyond the trend-channel resistance, currently near the $1820 region, might prompt some short-covering move. The attempted recovery, however, might still be seen as a selling opportunity and runs the risk of fizzling out quickly. This, in turn, should cap the XAU/USD near the $1835 region (38.2% Fibo. level).

XAU/USD 4-hourly chart


Technical levels to watch


Today last price 1814.22
Today Daily Change 7.44
Today Daily Change % 0.41
Today daily open 1806.78
Daily SMA20 1877.54
Daily SMA50 1891.48
Daily SMA100 1910.36
Daily SMA200 1797.38
Previous Daily High 1817.8
Previous Daily Low 1801.7
Previous Weekly High 1899.14
Previous Weekly Low 1852.8
Previous Monthly High 1933.3
Previous Monthly Low 1860
Daily Fibonacci 38.2% 1807.85
Daily Fibonacci 61.8% 1811.65
Daily Pivot Point S1 1799.72
Daily Pivot Point S2 1792.66
Daily Pivot Point S3 1783.62
Daily Pivot Point R1 1815.82
Daily Pivot Point R2 1824.86
Daily Pivot Point R3 1831.92



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