Gold Spot: Technical Outlook

Gold is now trading at $1177.76 and testing its broken horizontal support that has flipped to become resistance now. Prices are staying within a potential rising channel and failing to attract further buying to confirm a breakout above the resistance line of this channel. Stochastic has reached in overbought territory and failing to make a new high if compared to August 2015 peak when gold headed a high of $1169.93. Divergence between price and indicator hints weakening of bullish momentum that may result in failure of current rally. Immediate resistance is now placed at $1192. Decisive closing above $1192 will neglect these expectations of a bearish reversal and then retest to $1204 and $1227 can’t be ruled out. If we get a confirmation above 1193 then next big hurdle will be around $1233. Support is now seen near $1174 and then at $1163. Key support remains at 1163 and stability above this support will keep this metal in a sideways mode between 1165 and 1190. Any sustained move below 1163 will confirm a decline towards $1147 and then $1127. Areas of $1127 are supported by rising support line of a bullish channel and we may see a temporary halt in decline near those levels.

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