Gold prices rebounded quickly after falling sharply: a bearish head and shoulders pattern is forming, and it is still possible to continue falling

Forex PlatformOn Monday (June 17), spot gold suddenly fluctuated in the Asian market. The price of gold fell sharply to around $2,322/ounce, and then rebounded rapidly. It is currently located near $2,326/ounce. Nicholas Kitonyi, an analyst at the well-known financial website FXDailyReport, wrote an article analyzing the future trend of gold.

Kitonyi wrote in the article that during the 60-minute chart, the price of gold continued to trade within the ascending channel. The price of gold has now risen above the 100-hour moving average. Therefore, it seems that gold is about to enter the overbought level of the 14-hour relative strength index (RSI).

Spot gold rallied 1.23% to $2332.10 an ounce on Friday. Gold prices surged $38.36, or 1.67%, last week.

Forex.com senior market strategist James Stanley said that the fundamental outlook dominated by geopolitical uncertainty and rising debt levels remains positive for gold. However, he added that the short-term technical outlook is a bit shaky as price action is forming a bearish head and shoulders pattern with a neckline support zone between $2,300 and $2,275.

Stanley added that if gold prices fall below his initial support level, he wouldn't be surprised to see them all the way to $2,100 and retest the key support level at $2,075.

Alex Kuptsikevich, senior market analyst at FxPro, said that although gold prices have managed to hold the $2,300 support level in the past two tests, the level looks somewhat fragile. He pointed out that the twin factors of a weaker stock market and a stronger dollar could give the precious metal some headwinds in the short term.

Two charts to see the technical future of gold

In terms of short-term movements, Kitonyi said that from a technical standpoint, gold prices are trading in an ascending channel on the 60-minute chart. The 14-hour Relative Strength Index (RSI) also appears to support the current bullish momentum as it approaches overbought status.

Therefore, the current target of gold bulls is for gold prices to rise to $2,348/ounce, or higher than $2,363/ounce. On the other hand, gold bears will set short-term profit targets around $2,313/ounce, or lower at $2,297/ounce.

Kitonyi pointed out that on the daily chart, the price of gold is trading within the downside channel. However, the 14-day RSI appears to have a lot of room to maneuver before oversold conditions are reached.

Therefore, gold bears will seek to extend the decline in the price of gold and fall to $2,286/ounce, or lower than $2,230/ounce. On the other hand, gold bulls will seek to take profits when the price of gold rebounds to around $2,377/ounce, or higher at $2,429/ounce.

At 09:48 Beijing time, spot gold was quoted at 2326.16 dollars per ounce.

The above is the market analysis of the latest gold price. If you need to know more, you can consult online.