Gold staged a strong recovery above the $1,500 level yesterday after the United States Federal Reserve announced an unlimited bond buying programme.
Gold price technical analysis shows that the metal is only vulnerable to further losses while trading below the $1,500 level, as a bearish pattern has yet to meet its downside target.
Gold medium-term price trend
The Federal Reserve’s latest bond-buying scheme announced on Monday has provoked a major technical bounce in gold price.
Gold technical analysis shows that the yellow metal is still vulnerable to further losses with the $1,380 level a possible downside target.
The daily time frame continues to show that a large head-and-shoulders pattern is at work, which has a downside target at the $1,380 level.
Last week gold bulls retested the neckline of the mentioned bearish pattern, around the $1,545 level, and suffered a heavy rejection.
Gold is now trading above its 200-day moving average, around the $1,502 level, which means that gold is technically bullish again.
Going forward, key medium-term resistance for gold is found at the $1,580, $1,595 and $1,625 levels.
Gold short-term price trend
Gold technical analysis shows that the yellow metal is only likely to come under pressure over the short term if the price trades below the $1,540 resistance level.
The two-hour time frame currently shows that gold has broken out from a large descending triangle pattern.
The bearish target of the descending triangle pattern is located around the $1,380 level, with the neckline of the pattern found around the $1,510 level.
The break above the top of the descending triangle pattern, around the $1,510 level, has already seen gold prices rally towards the $1,580 area.
Watch out for the next strong directional move to take place in the gold price once the $1,540 to $1,580 range is broken.
Gold technical summary
Gold technical analysis shows that the yellow metal is still only vulnerable to further losses towards the $1,380 level if a breakout below the $1,540 level occurs. A large descending triangle pattern is currently unfolding across the lower time frames.