Gold: 1,300 Broken, Further Bearish Moves Likely

Last Friday's US Non-Farm Payroll gave Gold the bearish push that we've been looking for, sending prices resolutely below 1,300.

Generally there is a fear that such news-inspired moves may not simply be a one-time correction/overreaction. In this case the likelihood of this happening is even higher, as prices were actually trending sideways above 1,306 between Monday and Thursday. Bears did push below 1,300 briefly on Thursday, but the price recovered quickly and traded sideways once again - giving the impression that prices would have continued trading sideways if not for the NFP push.

Hourly Chart
XAU/USD Hourly Chart" title="XAU/USD Hourly Chart" height="629" width="989">
In this regard, this morning's bearish move is a good confirmation that a bullish pullback is not in play right now. However, prices are still some distance from breaking 1,284 - 1,285 the soft support from last Friday, post NFP. Only by trading below the aforementioned level then would further bearish conviction be confirmed. Without which, the chance of prices pushing up towards 1,290 increases - this does not necessarily mean that price would automatically push up higher but certainly the chances of price action reverting to the pre-NFP sideways trend increases.

Unfortunately for bears, the bearish momentum does appear to be stretched with Stochastic readings within the Oversold region. Even though this morning's decline prevented a bullish cycle signal from emerging, the additional allowance given most likely will be utilized fully when prices hit the Channel Bottom, increasing the likelihood of a move back higher eventually. Nonetheless, with the overall short-term bias remaining bearish, there is a chance that prices may still straddle the Channel Bottom lower instead of rebounding higher, but that would mean that Stochastic readings will remain extremely Oversold - not an impossibility but certainly a unwelcome monkey on the backs of those who are trading the 1,284 - 1,285 breakout.

Weekly Chart
XAU/USD Weekly Chart" title="XAU/USD Weekly Chart" height="629" width="989">
The Weekly Chart suggests that bearish momentum is in play, extending the Channel Bottom bearish rejection that occurred 2 weeks ago. However, even Stochastic indicators here suggest that prices may not be able to extend the current bearish run for much longer as readings are close to the Oversold region already. Hence, a move all the way towards the Channel Top beneath may be stretching it, and it is likely that prices may find some slight support from the recent swing low around 1,250 - if we even reach there that is.

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