Friday’s bullish attempt in gold prices was on the back of shrinking open interest and volume, leaving the door open to the resumption of the downtrend in the very near term. That said, the next target of note emerges at the recent 2022 lows near the $1,650 mark per ounce troy.

Gold touched the lower limit of the descending regression channel coming from March on Friday and the Relative Strength Index (RSI) indicator on the daily chart rebounded from 50, suggesting gold is in a correction phase while staying bearish.

On the upside, $1,680 (mid-point of the descending channel, former support) aligns as the next hurdle ahead of $1,700 (psychological level, static level). A daily close above the latter could attract additional buyers and open the door for an extended recovery toward the upper end of the regression channel at $1,720, where the 20-day SMA is also located.

Given the metal’s failure to defend the upside break of a short-term SMA inside a bearish chart formation, the gold bears are likely to keep the reins. However, the recently bullish MACD signals and nearly oversold RSI seems to restrict the short-term downside of the metal around the stated channel’s support line, close to $1,650 by the press time.

Meanwhile, the $1,700 threshold and the 100-SMA guard the quote’s immediate upside around $1,710 before challenging the bearish chart pattern’s upper line, near $1,720 by the press time.

It should be noted that the metal’s upside past $1,720 will need validation from the 200-SMA level surrounding $1,740 to recall the gold buyers

Gold Needs to Fill the Orders Before Bearish Continuation

Sep 19 2022