- Gold has found acceptance below the 100-day SMA support.
- The breakdown is backed by bearish readings on key indicators.
- A bigger decline may be in the offing.
Gold looks south, having breached the widely-tracked 100-day simple moving average (SMA) support for the first time since March 23.
The yellow metal fell by 1.67% on Wednesday and closed below the 100-day SMA, flipping the long-term technical support into resistance. The SMA is currently located at $1,887, and the metal is trading at $1,878 per ounce.
Wednesday’s drop also marked a downside break of the ascending channel represented by trendlines connecting Sept. 28 and Oct. 14 lows and Oct. 2 and Oct. 12 highs.
The rising channel breakdown and the 100-day SMA violation are backed by a below-50 or bearish reading on the 14-day relative strength index. Further, the MACD histogram has crossed below zero, indicating a bearish reversal.
As such, gold could see more pronounced chart-driven selling in the short-term. The immediate support is located at $1,848 (Sept. 28 low). Alternatively, a close above Wednesday’s high of $1,910 would neutralize the bearish setup.