Gold was attempting to make a second day of gains on Tuesday but was struggling to stay in positive territory. It hit 3-month low of 1085.35 last Friday and has now retraced more than 61.8% of the July 20-October 15 rally.
RSI and the stochastics have reversed into negative territory in the hourly charts and remain strongly bearish in the daily charts, indicating on-going downside momentum in the near-term. However, some further upside momentum is possible given that the stochastics are still in oversold ground.
The longer-term picture is not looking any better as prices remain below the 200-day moving average and below the Ichimoku cloud. A break below the key support level of 1071.19 – the July 20 low – would push gold back onto a downtrend. On the upside, the 61.8% of the Fibonacci retracement level at 1117 is the nearest resistance level that gold needs to overcome to shift the bias to a more neutral one.
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