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Gold closed the week well below the $1,900 level, marking its biggest one-day price decline of the year so far due to the super strong Non-farm payrolls job number for the month of January.
The yellow-metal came under pressure yesterday after government data showed more than half a million jobs were added in January, which put a damper on hopes that the Fed would pause any further interest rate hikes.
The notion that non-yielding gold is going to be less attractive due to an increased period of rates at elevated levels could cause some more technical damage for gold below $1,800.
Technically, golds run above its 50-day moving average 200-day moving average is a positive sign. It is imperative that the yellow metals continue to make traction above this key technical metric this week.
The golden-cross in a positive sign according to technical analysis and a history of data. This signifies where the 50-Day SMA crosses above the 200-Day SMA, creating a huge buy signal.
Current sentiment metric towards gold shows that sentiment has become slightly more bullish, which hints that retail are leaning the latest $100.00 price decline.
The ActivTrader market sentiment tool shows that 58 percent of traders are bullish towards gold. Going forward, we really need to see a strong negative bias by retail to help the chances of a sustained recovery.
Gold short-term Technical Analysis
According to technical analysis gold the price of gold could be about to move lower after breaking under its 200-period moving average. A 50 percent decline of the endure rally could reach below $1,800.
It is also noteworthy that a negative force is also seen, and that is bearish MACD price divergence. The diver hence hints that a correction towards the $1,770 level is possible.
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Gold Medium-term Technical Analysis
The daily chart shows that the yellow-metal has moved back inside its two-year range and more importantly could test back towards its 200-day moving average for the first time in nearly 3 months.
We could see the price of gold revisit the $1,800 level after being rejected from the top of its range again around the $1,865 to $1,875 area.
However, before that the price of gold starts to rally again, it likely has an important battle with its 200-day moving average, around the $1,800 level.
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