FX.co ★ XAU/USD, GOLD

Gold Golds decline below $4,996 on Friday set off a bearish flag pattern. On Monday, support was discovered close to the 50-day moving average, with a low of $4,966. This led to a narrow-range doji day, indicating weak bearish follow-through. Tuesdays low-momentum environment continued, and gold is expected to close the session with yet another narrow range day and support close to the 50-day average. The markets present hesitancy in the wake of the recent bearish trigger is highlighted by this persistent hesitation around important support. If the short-term trend is to continue, the 50-day average is a crucial dynamic support region. Since regaining the 50-day line in August, gold has served as dynamic trend support, even during the most recent steep three-day drop of 21.4% from a record high of $5,598. Further weakness and a realignment of the trend with the 100-day moving average, which is currently at $4,679 and increasing, could result from a persistent slide below that average. The February upper swing low of $4,402 was a successful test of support at earlier resistance indicated by a rising channels top trendline. The trend might be ready to move forward if previous resistance turns into support after a significant breakout. An elevated slope for the long-term trend would be further confirmed by a challenge of support close to or slightly above the rising 100-day average. As long-term support, the 100-day will shortly align at or above the upper channel line, offering further confirmation. This would assist in setting the trends next higher swing low. The crucial factor will be follow-through, notwithstanding the recent price behavior and bearish trend. A drop below $4,966 would imply a possible loss of support at the 50-day average as well as a continuation of the wedge and flag breaks. On the other hand, if gold surpasses Fridays peak of $5,128 and stays above that level, it will indicate increased demand and possibly refute the current bearish flag configuration. In that case, the present consolidation around the 50-day average might resolve to the upside, reestablishing a connection with the larger uptrend characterized by the higher lows since February.