FX.co ★ Technical analysis of Gold for June 2, 2016

Gold is trading above the $1,200 level and near the $1,220 short-term resistance. The price is expected to make a strong bounce towards $1,260 at least. However we might first see a small decline and a new low near $1,190 before this bounce.

Black trend line - resistance trend line

Blue lines - bearish channel

Red line - support trend line

Black lines - price projection

Gold is trading below the Kumo on the 4-hour chart and has also broken the red trend line support. This implies that we should continue lower to new lows. My target is between $1,200 and $1,190. However, it is not necessary to make a new low before bouncing towards $1,260 which is my medium-term target for the next few weeks.

The weekly chart shows the price has paused the decline just above the 38% Fibonacci retracement. Is the entire correction over? We cannot know this yet but I feel we should start looking for long positions, especially if the price breaks below $1,200. My medium-term target is $1,260.