There’s no sense denying it: the recent sell-off in gold pricing is predominantly technical.
Naturally, prices in the markets don’t trend in straight lines: if they did, we’d all have more money than we know what to do with.
I mean to say, retracements towards the average are necessary for an uptrend to continue, although you could be forgiven for forgetting that when looking at recent gold price action.
On the four-hourly, downside was bookmarked by a double-top pattern, which would spell the start of current downside. Since then, we’ve seen two SMAs cross, suggesting that further retracement is likely, at least in the short term.
Price has reacted well at the 200-period SMA, however, with a candle late into yesterday’s session forming an obvious pinbar.
Most importantly, the 200-period SMA has previously acted as a significant level of support, most notably at the start of the recent rally in August.
Albeit fundamental, traders would be well-advised to keep the above in mind ahead of the Trump-Xi meeting tomorrow.