Gold flirts with key support area

Gold has been trading relatively quietly for the last couple of days, being held near the 4,640 area, which currently coincides with the 100-day exponential moving average (EMA). With the US and Iran at an impasse over the Strait of Hormuz and peace negotiations yet to resume, gold traders are refraining from assuming a clear direction, especially ahead of this week’s central bank decisions, including the Fed, the ECB, the BoE and the BoJ.

Overall, the precious metal continues to trade below the prior uptrend line drawn from the low of November 5, meeting strong resistance around the 4,840 territory. This keeps the broader outlook cautiously negative, but for more bears to join the action, a decisive close below 4,640 may be needed.

A hawkish Fed and more difficulties to securing a permanent peace in the Middle East, could be the reason for such a break. If so, the bears may feel confident to dive towards the crossroads of the 4,345 support and the 200-day EMA. If they don’t stop there, they could aim for the low of March 23, at 4,100.

The RSI and the MACD are corroborating the notion that, for now, gold has no directional momentum. The former is lying flat near its equilibrium 50 line, while the latter is running fractionally below its zero line, very close to its trigger.

On the upside, a full-blown recovery above 5,000 may be needed for gold’s picture to start looking bullish. This could mean the metal’s return above the aforementioned uptrend line, allowing the bulls to aim for the 5,200 or 5,450 zones. If neither resistance holds, traders may put the record high of 5,598 on their radar.

To sum up, gold is trading quietly, holding near the 100-day EMA and the 4,640 zone. Although the metal remains below the uptrend line that previously supported the price action, for more bears to join the game, a decisive dip below 4,640 may be needed.