Gold: Limited risk of a steeper decline

Gold is ending the week with losses despite risk-off dominated the headlines. Spot gold recovered on Friday but held below the 38.2% retracement of the weekly slide, Valeria Bednarik from FXStreet informs.

Key quotes 

“Spot gold is trading below a critical area ahead of the close, as it lost the battle with a long-term major Fibonacci level, the 61.8% retracement of the 2011/2015 decline, and also the 23.6% retracement of its weekly decline, both levels just shy of 1,590.00.”

“The weekly chart shows that technical indicators are retreating sharply from overbought levels, maintaining their bearish slopes although well above their midlines. That said, the risk of a steeper decline seems limited in the long-term.”

“The daily chart shows that technical indicators have stalled their sharp declines near oversold levels, while the price develops some $50 below a now flat 20 DMA, indicating that the commodity may well resume its decline, particularly if it remains incapable of stabilizing above the current price zone.”