Gold bulls locked below 1,500; could lose momentum in the short-term.

Gold bulls got trapped around the 6-year high of 1,500 and the 61.8% Fibonacci of the long down-leg from 1,796 to 1,046 after gaining more than 3.5% last week.

Technically, the market could soften in the short-term as the RSI and the Stochastics seem to be slowing down in the overbought territory. The flattening Tenkan-Sen and the stable Kijun-Sen are also an indication that the market could trade more cautiously in the short-term.

Yet the higher highs and the higher lows over the last year and a price well above simple moving averages (SMA) and the Ichimoku cloud suggest that the upward pattern may stay for a longer period.

The 20-day SMA has been capping bearish movements in the past four weeks and hence could reasonably attract attention if the bears retake control. A decisive close below that line and more importantly under the 50% Fibonacci of 1,421 would shift the spotlight towards the 1,400-1,380 area, where any break lower would confirm the end of the bullish phase. In the medium-term picture, however, the sell-off should run under 1,350 to resume neutral conditions.

In case the 1,500 mark allows for more upside, the rally may extend until 1,560, a restrictive zone during the 2011-2013 period. Higher and above 1,600, resistance could be detected around the 78.6% Fibonacci of 1,635.

Summarising, gold is holding a positive status, though some weakness is likely to emerge in the near-term as the market seems to have entered overbought borders.


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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Source: XM

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