Gold bears catch a breather but 200-SMA guards immediate upside

Having recently dropped to the early December 2020 lows, gold prices bounce off $1817 to currently around $1840. Even so, the corrective pullback stays below 200-SMA. Other than the SMA breakdown, bearish MACD and a downward sloping trend line from last Wednesday also favor gold sellers. As a result, the yellow metal is up for a fresh decline targeting the $1800 threshold on the downside break below a horizontal area comprising multiple levels since November 25, close to $1817. In a case where gold bears refrain from stepping back around $1800, late November lows near $1789 and $1765 should gain the market’s attention.

Meanwhile, a clear break above the 200-SMA level of $1860 will eye to regain the $1900 round-figure. However, a short-term resistance line, near $1,881, adds to the upside filters. Even if the gold buyers manage to reach the $1,900 mark, there are multiple hurdles to the north between December’s peak of $1907 and November’s high surrounding $1965 that will offer a bumpy ride afterward. To sum up, gold prices have dropped below the short-term key support and are ready for further weakness.