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Gold rejected at 1H 200-MA, forms bear flag

  • Gold failed to take out 1H 200-MA hurdle despite weakness in the treasury yields.
  • The 1-hour chart shows a bear flag pattern.

Gold failed to take out 1-hour 200-MA level of $1277.69 in Europe but is holding above the flag support of $1276.

Prices fell sharply from $1286 to $1273 on Friday as the 10-year US Treasury yield rose more than six basis points (bps) to 2.4 percent. However, the yield has not been able to capitalize on the Friday's rally. It failed to take out the critical resistance of 2.4 percent earlier today and currently trades on the back foot around 2.38 percent; down 2 basis points on the day.

Consequently, the metal regained bid tone, but still failed at the 1-hour 200-MA seemingly due to 0.20 percent gain in the USD index.

Ahead in the day, the focus remains on the USD index and the long duration treasury yields.

Gold Technical Levels

A 1-hour close beneath the flag support of $1276 would signal a bearish flag breakdown, which a continuation pattern, i.e. it would mean the sell-off from $1286 has resumed and prices could visit $1266 levels (target as per the measured height method). On the higher side, a move above $1277.69 (1-hour 200-MA) would open the door for a re-test of $1280.56 (1-hour 100-MA).

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