Gold Short-Term Technical Outlook

Gold’s rebounded from five-month lows of $1764.24 and is back above $1,820 this Wednesday in early European trading, as the bulls gear up for a test of the earlier critical support now resistance at $1850.

The technical set up favors the bulls, as the price confirmed a bull pennant breakout on the 1-hourly chart in the last hour. The validation came in after gold gave an hourly closing above the falling trendline resistance at $1820.

The price pierced above the hourly 200-SMA at $1820.93, offering extra bullish signal to the XAU bulls after the hourly breakout.

The hourly Relative Strength Index (RSI) marches into the overbought territory, currently at 74.81, implying that the price could pull-back near the 200-SMA before resuming its upward journey towards the $1850 level.

A breach below the 1-hourly 200-SMA could bring price back to support at $1813.10 the 1-hourly 20-SMA and after that come $1,798.35 the 1-hourly 100-SMA support.

The recovery momentum remains intact so long as the precious metal holds above the $1800 level.