Gold Price Analysis: Bears challenge 2-week old ascending trend-line, around $1720 level

• Gold witnessed an intraday turnaround from weekly tops amid resurgent USD demand.
• Sustained break through an ascending trend-line needed to confirm a bearish breakdown.

Gold failed to capitalize on its intraday bullish spike to fresh weekly tops, rather met with some fresh supply and has now dropped to a short-term ascending trend-line support. The said trend-line extends from the $1670 support area, or monthly lows, which if broken might be seen as a key trigger for bearish traders and set the stage for further weakness.

Meanwhile, technical indicators on hourly charts have been drifting into the negative territory and support prospects for an eventual bearish break through the mentioned trend-line. However, oscillators on the daily chart – though have been losing positive traction – are yet to confirm the negative outlook and warrant some caution for aggressive bearish traders.

Hence, it will be prudent to wait for some strong follow-through selling below the $1715 region before positioning for any further near-term depreciating move for the commodity. The downward trajectory might then drag the precious metal back towards weekly lows, around the $1704 area, en-route the key $1700 psychological mark amid a goodish pickup in the USD demand.

Some follow-through selling might turn the commodity vulnerable to accelerate the fall back towards the $1670 horizontal zone, with some intermediate support near the $1685-80 region.

On the flip side, the $1730 horizontal zone might continue to act as an immediate resistance, above which the metal is likely to make a fresh attempt towards clearing the $1740-45 supply zone. A sustained strength beyond the mentioned hurdles now seems to set the stage for a move towards retesting multi-year tops, around the $1765 region.

Gold 4-hourly chart

Technical levels to watch