Gold’s Bearish Trend: Will Selling Pressure Persist?

Gold Forecast Video for 06.10.23 by Bruce Powers

Gold triggers an inside day and down today but does not see overwhelming selling pressure as support was seen relatively quickly at the day’s low of 1,813. That was a new low for the correction, yet it is just 2.00 below the prior trend low of 1,815 from two days ago.

Falling Trend Maintained

Today’s price action continues the general bearish pattern of lower daily highs and lower lows and today is likely going to see the lowest daily close of the correction. However, the close is set to complete above the 1,815 low, which is stronger than it might be. Price action of the past several days shows a slowdown in bearish momentum as the relative strength index (RSI) continues to become more oversold. The current reading is 19.27 while the last time the RSI was this oversold was in 2018.

Since downward pressure remains and continues to dominate sentiment in gold, a bearish trend continuation may yet win. A drop below today’s low of 1,813 signals a potential bearish continuation. Potential, because as seen today, an initial trigger may not follow-through right away or may reverse. So, price action should be watched following a signal.

Lower Target Zone May be Tested as Support

The next lower target zone is from 1,809 to 1,787. It is anchored by the February swing low of 1,805. Further, a measured move completes at 1,807 and shown with purple arrow lines. Other price levels within the potential support zone are derived from Fibonacci levels, including the 61.8% Fibonacci retracement at 1,794.

Capitulation May Require Hitting Lower Target Zone

Natural gas has been falling for 11 days and has seen no real bounce of note. This is a testament to the degree of selling pressure during the decline. It also may increase the chance to test the lower support zone before the selling pressure lifts. A drop below the 1,805-swing low would likely generate greater fear in the market for gold than has been seen so far. In addition, it would flush out weak holders by triggering stops sitting under that swing low. Nevertheless, the recent sharp selloff may be seeing the stage for a spike rally once sentiment turns from bearish to bullish.