Gold dropped lower on Monday fueled by increasing appetite for risk and rising U.S. Treasury yields. The spot market even broke the psychological $1500 level, which probably triggered a series of sell stops. Gold prices have been dropping now for three consecutive days after China announced the resumption of trade talks with United States, set for early October. This bearish development was a surprise to the speculative longs likely caught in a bull trap and had to liquidate. The daily chart clearly indicates that sentiment has shifted from buying strength to looking for value in a support area.
Gold prices dropped on Monday closing lower for the 3rd day in a row, to reach the 200-period moving average acting as a support zone around the $1487 area. While the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish. The RSI is suggesting oversold conditions and this might attract buyers at this point. Selling might accelerate should price move beyond the 200-MA today breaching the first level of support and driving the market lower.
Support: 1487.00 / 1448.00
Resistance: 1531.85 / 1555.00