XAU/USD has been in a tumbling mode since Monday, when it broke below the short-term upside support line drawn from the low of December 20th. The slide continued yesterday as well, with the metal hitting support at 1549 before rebounding somewhat. That said, the rebound stayed short-lived, below the 1564 level, and today, the price fell to stop again near the 1549 zone and the 200-EMA. Given that the metal is trading below the aforementioned upside line, we would consider the short-term outlook to be negative for now.
However, in order to get confident on more declines, we would like to see a clear dip below the 1549 level and the 200-EMA. Such a move may initially pave the way towards the low of January 14th, at around 1536, the break of which may allow the bears to push towards the 1525 zone, or the 1517 barrier, marked by the inside swing high of December 31st and the low of January 2nd respectively.
Looking at our short-term oscillators, we see that the RSI rebounded from near its 70 line, but turned down again, while the MACD lies below both its zero and trigger lines, pointing south as well. Both indicators suggest that the negative momentum remains relatively strong and support the notion for some further near-term declines.
On the upside, we would like to see a decisive break above 1592, marked by Monday’s peak, before we start examining whether the bulls have stolen the bear’s swords. This would also drive the price above the upside support line and may set the stage for the peak of January 8th, at around 1611. If the bulls breach that hurdle as well, then we could see them marching towards the 1627 zone, defined as a resistance by the inside swing low of December 2012.