The momentum indicators currently suggest that bearish forces are fading but remain in control. Specifically, the RSI gained significant ground but failed to pierce through its 50-neutral threshold, while the MACD is strengthening above its red signal line in the negative zone.
If the price extends its recent recovery, immediate resistance could be found at the May low of 1,932, which overlaps with the 50-day SMA. Conquering this barricade, the bulls could attempt to propel the price above the descending trendline that connects its recent lower highs before it tests the February high of 1,959. Further advances may then cease at the July peak of 1,987.
Alternatively, should bullion reverse back lower, the June bottom of 1,893 could act as the first line of defense. A violation of that territory might open the door for the five-month low of 1,884. Should that barricade also fail, the spotlight could turn to the March resistance of 1,857.
In brief, gold appears to be regaining traction after bouncing off strongly from its five-month low. However, a break above the downward sloping trendline is needed for the short-term picture to turn back to bullish.