Baxia Markets
January 18, 2024

Gold Struggles for Footing: Bearish Grip Tightens Despite Economic Intrigue

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After a precipitous 250-pip dive last week, gold (XAUUSD) finds itself trapped in a tight ascending channel, a prisoner of bearish sentiment. The price action whispers caution, with traders warily eyeing key technical levels and looming economic data that could alter the market's trajectory.


A crucial support line at $2019 crumbled under selling pressure, potentially morphing into a formidable resistance zone symbolized by an ominous orange rectangle. This transformation hinges on a breach of last week's swing low at $2001.76. Should this occur, not only would the new resistance be solidified, but a renewed bearish offensive would be unleashed.

Gold Struggles for Footing: Bearish Grip Tightens Despite Economic Intrigue

Gold Price Action

The recent decline has widened the gap between the EMA 50 and EMA 200, signifying intensifying bearish momentum. This, coupled with the ominous death cross that formed 24 hours ago, paints a grim picture for gold bulls.


Adding to the bearish chorus, the Bollinger Bands reveal a prolonged sojourn below the upper band, stretching over 48 trading sessions. The recent contraction of both bands hints at declining volatility, reflecting the ongoing consolidation within the ascending channel. Perhaps the market is simply holding its breath, awaiting a catalyst to break the stalemate.


Two key economic releases today – Initial Jobless Claims and the Philadelphia Fed Manufacturing Index – could prove to be the catalyst. While economists forecast a slight increase in jobless claims to 207K (from 202K) and an improvement in the Philadelphia Fed Manufacturing Index to -7.0 (from -10.5), these mixed signals might be contributing to the tightening grip of the Bollinger Bands on price movements.


Oscillators also paint a bleak picture for a bullish resurgence. The MACD histogram and signal line linger below the 0 line, underscoring the prevalent bearish sentiment. Similarly, the RSI has stubbornly settled below the 40% threshold and remained beneath the 60% mark since its recent plunge.


Overall, XAUUSD remains firmly in the clutches of a bearish landscape. The confluence of technical signals, economic data, and market dynamics paints a somber picture for gold, leaving it grappling with the challenge of reclaiming lost ground. Traders should remain vigilant, mindful of potential shifts in sentiment that could arise from economic developments or unforeseen events, as the market navigates this increasingly tense scenario.

Key Takeaways:

    • XAUUSD trapped in bearish ascending channel after 250-pip fall.
    • Crucial support at $2019 transformed into potential resistance zone.
    • Widening gap between EMAs and death cross confirm bearish momentum.
    • Contracting Bollinger Bands suggest low volatility, a market in wait-and-see mode.
    • Mixed economic data forecasts add to uncertainty.
    • Oscillators signal prevailing bearish sentiment, with RSI below 40%.
    • Gold faces an uphill battle to reclaim lost ground.

Key Economic Releases to Watch Today

USD,  Core Retail Sales (MoM) (Dec) 

Forecast 207K vs Previous 202K

USD, Philadelphia Fed Manufacturing Index (Jan)

Forecast -7.0 vs Previous -10.5


Gold Struggles for Footing: Bearish Grip Tightens Despite Economic Intrigue

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