Gold entered a tumbling mode last week, and on Thursday, it dipped below the uptrend line drawn from the low of November 13th, as well as below the support (turned into resistance) barrier of 1317. The free fall accelerated on Friday, with the price eventually finding support near the 1290 level just an hour ahead of the close. Today, gold opened with a positive gap, traded slightly higher for a while, but struggled to overcome the 1297 level and surrendered back to the bears, who pushed it below 1290. Having all this in mind, we would consider the short-term outlook to be negative for now.
At the time of writing, the yellow metal is testing the 1286 zone, defined by the inside swing high of January 23rd, where a decisive break may allow extensions towards the 1277 hurdle, which proved to be decent support from January 21st until January 24th. If that hurdle fails to stop the bears from pushing the battle lower, its break may set the stage for the 1266 territory, marked by the low of December 27th.
Shifting attention to our short-term oscillators, we see that the RSI lies within its below-30 zone and points down, while the MACD is below both its zero and trigger lines, pointing south as well. These indicators suggest accelerating downside speed and support the notion for further declines.
On the upside, a clear recovery above 1297 may be a sign that the bears have decided to take a break for now, and that a corrective phase is on the cards. Such a break may initially aim for the 1303 area, which supported the price action from February 7th until February 14th, the break of which could open the path for the tentative downside resistance line taken from the high of February 20th, slightly below the 1312 mark.
XAU/USD, 4H Chart