Gold Technical: Potential breakdown to resume short-term downtrend

  • In the past 3 weeks, Gold (XAU/USD) has been evolving with a minor “Descending Triangle” with its range support at US$1,940.
  • Price actions have failed to surpass the 50-day moving average now acting as a resistance at US$1,991.
  • Short-term downtrend phase from the 4 May 2023 high remains intact.

Fig 1:  Gold (XAU/USD) major trend as of 13 Jun 2023 (Source: TradingView, click to enlarge chart)

Fig 2:  Gold (XAU/USD) short-term trend as of 13 Jun 2023 (Source: TradingView, click to enlarge chart)

This is a follow-up to our previous analysis, “Gold Technical – a potential short-term downtrend in play” published on 22 May 2023 (click here for a recap).

The price actions of Gold (XAU/USD) have declined by -2.2% since 22 May and hit the support of US$1,940 on 26 May.

Sideways within a bearish “Descending Triangle” range configuration in the past 3 weeks

Since the test on its US$1,940 support on 26 May 2023, Gold (XAU/USD) has traded sideways and retested US$1,940 on three occasions within the past 3 weeks. The price reactions that bounced off the US$1,940 support have been lacklustre as they formed “lower highs” which gave rise to the formation of a bearish “Descending Triangle” range configuration (refer to the 4-hour).

Minor short-term downtrend phase from the 4 May 2023 high remains intact

Since its 4 May 2023 high of US$2,067 (also its current 52-week high), Gold (XAU/USD) has been evolving within a short-term downtrend phase within a major uptrend phase in place since 3 November 2022 low of US$1,616 (see daily chart)

US$1,991 remains the key short-term pivotal resistance to maintain the short-term bearish tone and a break below the minor “Descending Triangle” range support of US$1,940 exposes the medium-term support zone of US$1,913/1,896 (also the lower boundary of the major ascending channel from 3 November 2022 low).

However, a clearance above US$1,991 sees the next resistance coming in at US$2,067/2,075.

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Kelvin Wong

Kelvin Wong

Senior Market Analyst, Asia Pacific at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities. Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets. In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.