Despite the latest bounce off the 200-day EMA, a clear break of a fortnight-old ascending trend line and the RSI pullback from overbought territory favor gold bears to snap a two-week uptrend. The metal’s downside, however, appears limited as a three-month-old horizontal support area near $1,730 appears a tough nut to crack for the bears. Also acting as a downside filter is the 100-day EMA surrounding $1,722, a break of which won’t hesitate to direct sellers towards the 23.6% Fibonacci retracement level of June-September south-run, close to $1,675.
Meanwhile, recovery remains elusive below the support-turned-resistance line from November 03, around $1,795 at the latest. That said, a five-month-old horizontal area surrounding $1,805 could challenge the gold buyers afterward. In a case where the precious metal stays firmer past $1,805, the 78.6% Fibonacci retracement near $1,822 can act as a buffer during the run-up targeting the mid-2022 peak surrounding $1,875 will be in focus.
Overall, gold is likely to decline further but the downside room appears limited.