Gold discovers support at the 200-day Simple Moving Average (SMA)
- Gold fails to pierce the descending trendline
- Encounters strong support at 200-day SMA
- Is bullion headed for a re-test of the crucial barrier?
Gold experienced losses after its advance was rejected at the downward-sloping line that connects its recent lower highs. However, the 200-day simple moving average (SMA) capped the pair’s decline, with the short-term oscillators pointing to more gains in the near term.
If the price attempts to move higher, immediate resistance could be found at the May low of 1,932, which overlaps with the 50-day SMA. Conquering this barricade, the bulls could propel the price above the descending trendline before the February peak of 1,959 gets tested. Further advances may then cease at the July high of 1,987.
Alternatively, should bullion reverse back lower, the recent support of 1,915 could act as the first line of defense. A break below that zone might pave the way for the June low 1,893. Even lower, the five-month bottom of 1,884 may provide downside protection.
In brief, gold is regaining traction after bouncing off strongly from its 200-day SMA. However, a break above the downward-sloping trendline is needed for the short-term picture to turn back to bullish.