Gold had been trading in a sideways manner from the 2nd of January until the 15th of May, between 1307 and 1365. On the 15th of May, the metal exited the sideways range to the downside, something that turned the picture somewhat negative in our view. Since the 24th of the month, any attempts of the bulls to drive the battle higher stayed limited below 1307, the lower bound of the range, which suggests that another negative leg may be looming in the short run.
If the bears are strong enough to overcome the 1285 support zone, we would expect them to aim for the upside support line taken from the low of the 10th of July, or the 1265 support zone. If those technical zones fail to prove to be obstacles for sellers, then we could see them setting the stage for our next support zone of 1240.
Shifting attention to our momentum studies, we see that the RSI turned down from slightly below its 50 line, while the MACD shows signs of topping within its negative territory. It could fall back below its trigger line soon. These indicators detect negative momentum and support the case for the yellow metal to continue drifting lower for a while more.
On the upside, a clear surge back above 1307 would bring the price back within the aforementioned sideways range and could turn the medium-term picture back to neutral. A move back above 1307 could initially target our next resistance of 1325.
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