Traders looking for a buy signal in the yellow metal have little to go on as buy volumes appear light, and the rebound from below the $1,700 support level has so far been tepid at best.
However, it should be noted that gold did test towards the bottom of multi-year range from March 2020 last week, and sellers failed to stage a meaningful breakthrough under this key technical area.
If sellers continue to struggle to break under the $1,700 level then it is entirely possible that we could be about to see a major bounce back in the price of gold towards at least $1,790.
Should we see a range break under the $1,700 level then the consequences for gold price is quite dire. Gold could tumble by a further $200.00 if a range break did occur according to technical analysis.
Sentiment is dropping slightly now. The sentiment skew is getting less extreme, which is a positive force for a potential. recovery in the price of gold this week.
Current sentiment metric towards gold show that traders are getting less bullish. The ActivTrader market sentiment tool shows that 65 percent of traders are bullish towards gold.
Gold short-term Technical Analysis
The short-term technicals for the yellow metal are still very bearish, however, a glimmer of hope exists as significant amount of negative price divergence has started to form.
Looking at the MACD price divergence, we could see the price of gold rallying towards the $1,750 level if the positive MACD price divergence starts to unwind.
Gold Medium-term Technical Analysis
The daily chart shows that gold has now officially tested towards the bottom of its price range. As you can see the top of the range is basically $2,050, while the bottom is slightly below $1,700.
A break under the range would be a huge problem for gold and would indicate that a $300.00 down move could happen. It is very important that the price of gold continues to rebound now.