Gold prices set for a bearish turn below 21-D SMA, targets $1,265

Initially, the US dollar was favoured by investors at the start of the week following mixed Chinese data which made for assorted sentiment in markets surrounding the outlook for global growth. However, the IMF came out and tipped the balance into the favour of bears on that front when the fund projected a 3.5 percent growth rate worldwide for 2019 and 3.6 percent for 2020. These are 0.2 and 0.1 percentage points below its last forecasts in October — making it the second downturn revision in three months.

Speaking at the World Economic Forum in Davos, the IMF's Managing Director Christine Lagarde said: "After two years of solid expansion, the world economy is growing more slowly than expected, and risks are rising. But even as the economy continues to move ahead ... it is facing significantly higher risks."

Gold is fundamentally neutral

On balance, such news should support gold prices as investors seek out safe havens, a place where idle capital can rest in times of uncertainties with some potential upside,  of which gold offers during unpredictable markets. Moreover, according to the COT report, large gold speculative positions have been on the rise. "We're watching strong official sector gold purchases, which open up the possibility that prices can move significantly above our projected $1,400/oz+ in late 2020, should central banks catch the "gold bug"," analysts at TD Securities explained.

Gold levels

However, the for the meanwhile, Gold has started to test below the 21-D SMA at 1281and below the pivot of 1284 which exposes the downside following a strongly bearish Marubozu Japanese candlestick formation from last week's closing session. The price action is indicating that sellers are in control following a corrective weekly doji of the prior session. From a technical outlook, the daily MACD is running negative while RSI is also switching direction below 70, supportive of the trend. Should the price make a close below the 21-D SMA, then 1265, (S3) and the confluence of the 23.6% retracement of the Aug 2018 rise to YTD comes as the next key target ahead of 1260 round psychological number.