Gold Price Analysis: Recovers early lost ground to 1-1/2-week lows, back around $1685 level

• Gold edged lower for the second consecutive session on Friday.
• The commodity managed to find some support near $1670 level.
• The set-up warrants some caution before placing aggressive bets.

Gold added to the overnight losses below the $1690 horizontal support and remained under some selling pressure for the second consecutive session on Friday. The downtick – marking the fifth day of a negative move in the previous six – dragged the commodity to 1-1/2-week lows.

However, slightly oversold conditions on the 1-hourly chart helped limit any further losses for the metal. Meanwhile, oscillators on the 4-hourly chart have been drifting lower in the bearish territory, albeit have managed to maintain their positive bias on the daily chart.

Hence, it will be prudent to wait for some strong follow-through selling below the daily swing lows, around the $1670 region, before positioning for any further near-term depreciating move. The metal then seems all set to extend its recent pullback from multi-year lows.

The downward trajectory has the potential to drag the commodity further towards last week’s swing low, around the $1660 level. The mentioned support region coincides with the 38.2% Fibonacci level of the $1568-$1748 strong positive move.

Meanwhile, any attempted recovery now seems to confront some fresh supply near the $1690 horizontal support breakpoint, now turned resistance. This is followed by the $1700 round-figure mark and the $1705 resistance zone (23.6% Fibo. level).

Some follow-through strength might negate any near-term bearish bias and set the stage for a move back towards challenging the $1722 supply zone. Bulls might then aim towards the next major hurdle, near the $1731 level, en-route multi-year tops.

Gold 4-hourly chart

Technical levels to watch