Gold Price Analysis: Trims gains, immediate bias bearish
- Gold has backed off from session highs and could suffer deeper losses in the short-term.
- Gold's daily chart is reporting a bearish reversal setup.
Gold is currently trading at $1,637 per Oz, having hit a high of $1,650 in Asia.
The pullback is not surprising, as the technical studies are biased bearish. To start with, the daily chart shows a spinning top bearish reversal pattern - Monday's spinning top followed by a 1.8% drop on Tuesday.
Further, the yellow metal created a big red candle with a notable upper shadow (sell on the rise mentality) on Tuesday, reinforcing the short-term bearish bias. Also, the daily RSI is reporting a bearish divergence.
The odds appear stacked in favor of a drop to the 50-day average support at $1,590. The bearish case would weaken if prices find acceptance above $1,671, invalidating the lower highs setup on the hourly chart.