Gold has been experiencing a downward trend in the short-term, hovering near oversold territory. Tuesday saw gold bears taking control, pushing the price below the resistance-turned-support trendline. This decline brought the price closer to the 200-period exponential moving average (EMA) in the four-hour chart, currently standing at 2,280.
Technical indicators such as the Relative Strength Index (RSI) and the stochastic oscillator have stabilized their downward movement near previous lows within the oversold region. This signals a potential upside reversal, indicating that the bearish action might be excessive and could lead to an upward correction or some stability. However, the continuous fall of shorter-term EMAs suggests that the negative trend could persist.
If the bears manage to breach the floor at 2,280, the next support level could be found within the 2,250-2,260 range. This area includes the 23.6% Fibonacci retracement of the February-April uptrend, the lower boundary of the current short-term bearish channel, and the protective trendline from March 5. Further downside momentum could lead gold towards the 50% Fibonacci level at 2,200, with the 2,185 zone from March acting as a potential pivot point.
On the upside, a bounce off the 200-period EMA could create congestion between the 20- and 50-period EMAs at 2,311 and 2,325, respectively. However, surpassing the downward-sloping channel at 2,355 is crucial for a more bullish outlook. Breaking above this level could pave the way for a direct move towards 2,400, with the ultimate target being a challenge of the 2,430 record high, though resistance may be encountered near 2,460.
It is important to note that the FOMC policy announcement scheduled for today at 18:00 GMT could have a significant impact on gold’s short-term trajectory. Traders should closely monitor the reaction of gold prices to this event, as it could provide clues about the market sentiment and potential price direction in the coming sessions.
The future of gold will be heavily influenced by the ability of the bulls to defend key support levels and break above crucial resistance barriers. Traders should remain vigilant and adaptable to changing market conditions to make informed decisions and navigate the volatility in the precious metal market.