- Gold has seen some selling for the second day in a row on Friday.
- The oversold RSI on the 1 hour chart helps gold to bounce off the eight-month lows.
- Bearish oscillators on the 4-hour / day charts support the prospects for a further short-term decline.
Gold remains under pressure during the first half of the European session on Friday, although it has managed to recoup some of its initial losses to eight-month lows. The precious metal is trading near the region of $ 1,767, down 0.15% on the day.
From a technical perspective, the slightly oversold RSI on the one-hour chart appears to be the only factor offering some support to the XAU / USD. That said, the oscillators on the 4 hour / day charts remain in bearish territory and are still far from being in the oversold zone. This, in turn, favors the bears and supports the prospects for a further decline.
However, any subsequent decline is likely to find some support near a short-term downtrend line, currently around the $ 1,750 region. The bears could wait for a sustained break below the mentioned support before opening new positions. The XAU / USD could accelerate the decline further towards the $ 1,725-24 support en route to the round $ 1,700 level.
On the other hand, immediate resistance is at the daily high, around the $ 1,775 region. A sustained force above this level could trigger a short covering move and push the XAU / USD towards the $ 1,800 level. This is closely followed by another resistance from a downtrend line, around the $ 1,805-06 area, which if broken to the upside will negate any short-term bearish bias.
Meanwhile, the two converging descending trend lines constitute the formation of a bullish descending wedge. A few subsequent purchases above the resistance of the weekly highs near the $ 1.815-16 region will add credibility to the bullish breakout and set the stage for a further short-term upward move for the yellow metal.
Daily chart gold
Gold technical levels
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