After a fall from the March high of $2,000 per troy ounce, gold traded in a downtrend. However, the precious metal might soon enter a short-term bullish correction, according to a technical analyst.
Founder of Moor Analytics Michael Moore suggests that gold's recent consolidation at around $1,700 per troy ounce might indicate the end of the bearish impulse. He also notes that the asset's critical exhaustion levels are just below $1,700 per troy ounce.
It is still too early to determine if a bullish correction can maintain the current trend. It will become clearer should gold rise above $1,800 by the middle of August.
While gold has been under pressure for most of the year, it could still bounce back to highs above $2,000 per troy ounce if support stays at $1,700.
However, in case of a fall below $1,686 per troy ounce, the precious metal might incur significant losses.
Gold is firm at $1,700 because of the ECB's rate hike. It remains to be seen how long the dollar will remain weak.
Investors should trade conservatively by opening positions and taking some profit when the asset rallies to resistance points.
