Gold traded somewhat higher yesterday but hit resistance slightly below the 1207 level during the Asian morning Thursday, and then it slid. The metal appears to be trading within a sideways range between 1190 and 1213 since the 24th of August and thus, we would consider the short-term outlook to be neutral for now. However, bearing in mind that it is also trading below the longer-term tentative downtrend line drawn from the peak of the 11th of April, we see more chances for the price to exit the range to the downside rather than to the upside.
A decisive break below the range’s lower end of 1190 may confirm the case and is possible to initially aim for the 1183 support obstacle, defined by the low of the 24th of August. If that level fails to prevent the price from falling further, then we may see the bears driving the battle towards our next support of 1172, marked by the low of the 17th of the month.
Taking a look at our short-term momentum studies, we see that the RSI turned down after it hit its respective downside resistance line, while the MACD, although slightly above both its zero and trigger lines, shows signs of topping near its own downside resistance line. These indicators support somewhat the notion for the yellow metal to drift a bit lower, at least within the aforementioned range.
In order to assume that the price has exited the range to the upside, we would like to see a clear break above 1213. Such a move could initially target the 1217 level, which proved a reliable resistance from the 5th until the 10th of August, the break of which could pave the way towards the 1225 zone or the downtrend line drawn from the peak of the 11th of April.
