Gold falls back after upside move stalls at key resistance level | investingLive

The drop today sees gold poised for back-to-back daily declines now as investors are focusing on more positive trade developments since yesterday. But amid a weaker dollar, gold still caught a bid earlier in the week to run up above $3,400. The upside push tested a key resistance level for gold on the daily chart and ultimately, sellers held their ground.

It is the third time in as many months that gold has tried to take a run above the resistance region of $3,430-35 but ended up failing.

That is a setback for buyers as price action now returns back to the consolidation phase that we have seen since the latter stages of May. So, what’s next for gold now?

The rejection is a blow to a potential upside breakout but gold still has the same factors working for it as it has earlier this year.

Sure, trade uncertainty is supposed to be one of the main tailwinds for gold but that has long dissipated amid the TACO trade. Yet, gold has been holding rather resilient since April up until now.

And a lot of that ties back to the loss of confidence with the dollar as well. And when you throw in other factors such as ETFs needing to catch up and central bank demand still largely underpinning the precious metal, there are still a host of reasons for gold to stay bullish for now.

But what about the charts?

The latest drop this week now brings gold back to trade in between its key hourly moving averages. That means the near-term bias is now more neutral instead.

That suggests the upside momentum has cooled a fair bit and buyers will have to seize back near-term control first before talking about another potential breakout above the key resistance region noted earlier above.

For now, the 200-hour moving average (blue line) near $3,365 is helping to stall the downside today. Keep above that and buyers are still hanging in there in waiting for another shot to get back to the upside. But break below, and the near-term bias switches to being more bearish. And that opens up a potential extension to the drop this week back into the consolidation zone closer to $3,300.

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