Gold stuck in a waiting game

• Gold holds sideways trajectory in short-term picture.

• Technical signals cannot guarantee meaningful rally.

• Key resistance at 2,680, support at 2,600.

Gold found itself trapped between its 20- and 50-day simple moving averages (SMAs) and within the 2,637-2,660 region after opening the new year with a promising gap higher.  

The US calendar will become busier in the week ahead, with nonfarm payrolls likely heating up volatility on Friday. However, from a technical perspective, there are barely any encouraging signs in the market. The RSI is still struggling to enter the bullish area above 50, reflecting a lack of conviction in buyers, and the stochastic oscillator is set for a negative reversal, suggesting momentum could shift lower.

A close above the 50-day SMA at 2,653 could raise some buying interest, but that alone may not be enough for a sustained rally. For a real turn in market sentiment, the price must successfully breach the resistance area of 2,670-2,680, where the 23.6% Fibonacci retracement of the June-October upleg is located. In this case, the price may stage a fast bull run toward the crucial 2,720 territory, which blocked the price twice in November and December. Should the wall around 2,750 collapse as well, the precious metal may target the 2,789-2,815 territory, a break of which could see a continuation toward the 2,870-2,900 zone.  

On the downside, support could initially emerge near 2,600, which coincides with the lower boundary of a symmetrical triangle and the 38.2% Fibonacci mark. Moving lower, the price may attempt to pivot near the ascending line at 2,570. If it fails to set a strong footing there, the spotlight will fall on the 50% Fibonacci of 2,540 and the November low, a break of which would downgrade the short-term outlook to bearish, likely causing an aggressive decline toward the 200-day SMA and the 2,500 round-level.

All in all, the yellow metal is currently caught within the neutral zone of 2,600-2,680, and the next big move could hinge on whether the precious metal breaks its balance above or below this range.