Gold prices continued to decline yesterday on speculations that there will be some kind of an agreement between the Democrats and Republicans before the October 17 deadline. The pair traded as low as 1282.47 after failing to climb above the Ichimoku cloud on the 4-hour time frame.
In my recent analysis, I have been telling that technical outlook was bearish and the bears had more strength than the bulls. From a technical point of view, the XAU/USD pair will maintain its bearish outlook while the descending trend-line dating back to the August high of 1433.70 continues to block the bulls' way. Prices are below the Ichimoku clouds on both the daily and 4-hour chart. In addition, we have bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen line (twenty six-day moving average, green line) crosses.
Although short term charts suggest that there is still more room to the downside, the 1275 support level will be the key zone to watch because the XAU/USD pair has paused or reversed at this same price level several times since June. If the downward pressure continues and the 1275 support gives way, look for 1253, 1244 and 1236. However, if buyers step in and successfully defend the 1275 level, then we will probably revisit 1291 and 1302 levels today. Beyond that, there will be more resistance at 1315 and 1326.
