XAU / USD clings to modest recovery gains, bearish bias remains intact

• Gold registers a modest recovery from near the very important 200-day SMA.
• The short-term technical setup still looks strongly in favor of the bears.
• The recovery attempt could be seen as a selling opportunity and remain limited.

Gold has found decent support just above the very important 200-day SMA near the $ 1,800 level and is making a modest bounce on Wednesday. The precious metal is trading modestly on the day, near the $ 1,810 / 15 level at the start of the US session.

A modest pullback in US stock index futures has turned out to be a key factor causing some short coverage near a technically significant moving average. That said, the short-term bias remains firmly in favor of the bears.

XAU / USD broke horizontal support near the $ 1850 / $ 48 region on Tuesday. A subsequent drop below the 38.2% Fibonacci retracement of the positive move from $ 1,451 to $ 2,075 and the bearish channel support confirmed a further break to the downside.

Meanwhile, the technical indicators on the daily chart maintain their bearish bias and are still far from being in oversold territory. This adds credibility to the negative outlook and supports the prospects for a further decline.

However, it will be prudent to wait for some subsequent selling below the $ 1,795 region (200-day SMA) before positioning for any further bearish movements. The yellow metal could accelerate the decline towards 50% Fibonacci, around the $ 1,760 region.

On the other hand, the breakout point of the channel support, around the $ 1,820 area, can now act as the immediate resistance. Any subsequent bullish movement could be seen as a selling opportunity and remain capped near the $ 1,835 area (38.2% Fibonacci retracement).

Daily chart gold

Gold technical levels