Gold Price Analysis: Bounce from sub-4H 200-SMA has stalled

Gold retreats from session highs near $1,715, erasing part of the overnight bounce.
Both 4-hour and daily charts indicate scope for deeper declines.

Gold's overnight drop below the 4-hour chart 200-candle simple moving average (SMA) was short-lived, possibly due to US-China tensions. Technical charts, however, indicate the bounce could be undone during the day ahead.

The yellow metal found bids near $1,708 and rose back above the widely-tracked SMA of $1,711 to hit a high of $1,715 a few minutes before press time. The uptick was likely fueled by comments from the US Senator Rubio that the US would impose sanctions on China if the dragon nation passes the Hong Kong security bill.

However, the recovery in gold now looks to have stalled. At the time of writing, the yellow metal is changing hands near $1,712. The 5- and 10-day averages have produced a bearish crossover and the 4-hour chart is reporting a lower high, lower lows setup. Meanwhile, the daily chart MACD histogram is printing deeper bars below the zero line, a sign of the strengthening of the downward momentum.

So, a drop to $1,700 cannot be ruled out. A violation there would shift the focus to $1,680, which repeatedly restricted losses in the six trading days to May 7. On the upside, a close above Tuesday's high of $1,735 is needed to invalidate the immediate bearish outlook.

Daily chart

4-hour chart

Trend: Bearish

Technical levels

1. R3 1754.72
2. R2 1745.21
3. R1 1728.12
PP 1718.61
1. S1 1701.52
2. S2 1692.01
3. S3 1674.92

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