Gold: The bulls are no longer in control [Video]

Gold

Following the breakdown of the 8 week uptrend and the support at $1693 we turned neutral on gold. Noting that the bulls are no longer in control, we see that upside traction is difficult to sustain and in the past couple of weeks the negative candles are more of a dominant force on the daily chart. Momentum indicators sliding back are a reflection of this. The RSI went below 50 for the first time since March this week, whilst MACD lines continue to fall and Stochastics are also their lowest since March. We have recently been talking about the $1722 old May pivot being a gauge for the market, and it was interesting to see yesterday’s rebound faltering at $1721 (the hourly chart shows a band of resistance now $1720/$1725). We believe that the price action of the last two weeks suggests that gold has developed into a trading range now, of around $100 between $1660/$1764. Effectively then, at current levels, the market is trading around the mid-point of this range. On the hourly chart we continue to note the slightly corrective bias that is in place, with eh hourly RSI stuck under 60, whilst MACD lines have crossed lower around neutral in the wake of the rebound failure at $1721. The market is in more of a choppy mid-range phase now. A negative candle posted today will continue the near term negative bias and increase pressure on $1689 (Wednesday’s low). If breached then it would suggest a negative drift back towards the $1660/$1668 range support band. Closing back above $1722 begins to edge more of an improving bias once more, but the market needs a pull above $1744 to end a corrective run of lower highs.