The cost of gold struggles to retain the rebound from the onset of the week as longer-dated US Treasury yields hold over pre-pandemic amounts, and looming developments from the Relative Strength Index (RSI) may indicate a further decline in gold prices since the index begins with oversold territory for first time since November.
The cost of gold tries to recuperate from a five-day losing streak as it bounces back by a brand new annual low ($1717), but the break below the November reduced ($1765) provides further sign that the decline from the record high ($2075) is a potential shift in market behaviour as a’passing cross’ takes shape in 2021.
Subsequently, the price of gold may continue to return the advance in the June 2020 low ($1671) since the 50-Day SMA ($1842) now reflects a negative slope, along with the RSI may demonstrate the bearish momentum gathering pace as it appears to be pushing right into oversold territory. The split below 30 at the RSI is very likely to be accompanied by a further decrease in the price of gold especially if the oscillator reflects the extreme readings (22) last seen in 2018, and the precious metal may continue to display a bearish behavior before another Federal Open Market Committee (FOMC) interest rate decision on March 17 even though the Fed’s balance sheet climbs to a new record high of $7.590 trillion.
With that said, the recent rebound in the price of gold might wind up being short lived as the rise in longer-dated US Treasury yields look poised to persist, along with the Relative Strength Index (RSI) may indicate a further decline in gold prices since the index flirts with oversold territory for the first time since November.
GOLD PRICE DAILY CHART
Resource: Trading View
Keep in mind, the price of gold pushed into fresh annual highs during the first half 2020, with all the bullish price action also taking shape in August as the precious metal labeled a new record high ($2075).
However, the bullish behaviour failed to materialize in September because the cost of gold traded below the 50-Day SMA ($1842) for the first time since June, together with improvements in the Relative Strength Index (RSI) negating the wedge/triangle formation established in August as the oscillator slipped to its lowest level since March.
The RSI dipped into oversold territory in November for the first time since 2018, together with the correction in the record ($2075) suggesting a possible shift in market behavior as the price of gold takes the November reduced ($1765).
In turn, the purchase price of gold will continue to return the progress in the June 2020 reduced ($1671) as a’death cross’ formation takes shape in 2021, and the RSI may show the bearish momentum gathering pace if the oscillator crosses below 30 and reflects the extreme readings (22) last seen in 2018.
The break/close below the Fibonacci overlap approximately $1743 (23.6% expansion) to $1763 (50% retracement) brings the $1690 (61.8% retracement) to $1695 (61.8% growth ) area on the radar, with the next area of interest coming in around $1670 (50% expansion), which largely lines up with the June 2020 low ($1671).
