Gold has retraced almost 80% of the May decline from its year-to-date high of 1303.6 to 1199.64, finding resistance around the 78.6% Fibonacci level. Prices have rallied by around 7% from the May 30 low of 1199.64, shifting the near-term bias back to positive.
Looking at the momentum indicators, RSI has dipped slightly downwards after today’s pause but remains firmly in positive territory. The MACD also suggests there is scope for further gains with the histogram rising back above 0 and the signal line trending up.
Further gains could see prices finding resistance around 1287 and 1295. A successful break above 1295 could put the yellow metal on track to beat the 2016 high of 1303.60 and resume the longer-term uptrend that began in January.
If the upside momentum fails to hold, support is likely to come from the 61.8% Fibonacci level at around 1264. Below that, the 50% Fibonacci level comes in focus at 1251.50. This is also where the 50-day moving average is converging. A drop below level would weaken the bias towards a more neutral one.
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