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  • Gold rebounds off 2,370 support

  • Prices penetrate short-term downtrend line

  • But momentum oscillators look overstretched

Gold prices have been in a bullish corrective mode during the week, paring/reversing some of its losses from July 24. The price has now surpassed the short-term downtrend line and the simple moving averages (SMAs), testing the 2,420 level.

Over the past week, the bulls have struggled to enter the 2,400 area, and they may face another challenging obstacle near the 2,430 resistance. The technical indicators suggest that the bulls may lose this battle. Specifically, the RSI is moving horizontally slightly below the 70 level, while the stochastic oscillator is ready for a bearish crossover between its %K and %D lines in the overbought territory.

In the event the commodity continues its ascending move above the Ichimoku cloud and the 2,430 barricade, the next target will be the 2,475 resistance.

On the downside, the 2,403 support and the 50- and 20-period SMAs at 2,395 and 2,392, respectively, could be the immediate levels for traders to watch. Hence, a step beneath these lines and the 2,370 level, which coincides with the 200-period SMA, might produce fresh negative volatility.

Overall, the precious metal is sustaining an upward trend above 2,400 in the four-month picture. To attract new buyers, the pair will need to pierce through the 2,475-2,483 bar.