Gold renewed the yearly bottom on breaking the fortnight-old support line, now resistance around $1,700, the previous day. The following consolidation, however, remains doubtful even as the oversold RSI challenges intraday sellers. That said, the precious metal drops towards the 78.6% Fibonacci Expansion (FE) of the August 17 to September 12 moves, near $1,662. Though, a three-week-long downward sloping support line from late August, near $1,650, could trigger the quote’s rebound, if not then the 100% FE level surrounding $1,641 and the $1,600 threshold will be in focus.
Alternatively, recovery moves need to stabilize beyond the $1,700 to convince short-term gold buyers. Following that, the weekly high of around $1,735 and the 200-SMA near $1,746 could be considered as the final defenses for the bears. In a case where the bullion prices cross the $1,746 hurdle, a run-up towards the late August swing high around $1,765 and then to the $1,800 threshold can’t be ruled. However, the previous monthly top surrounding $1,808 might allow the XAUUSD bull a break afterward.
To sum up, gold is likely to remain bearish ahead of the next week’s Fed meeting even if the downside appears limited.