Gold has been rather choppy as of late and after having bounced around in between its key daily moving averages, price action is pointing to a breakout and it is leaning towards the downside this week.
Of note, price is taking out the key trendline support from the March and November lows - a level which helped to limit the daily drop in gold since last month.
That puts the focus on the January lows @ $1,804-17 with sellers keen to take a run at the $1,800 handle surely. A break below the figure level will then turn the attention to the November low @ $1,764.80 next.
As things stand, rising yields is adding to some uneasiness for gold but so far real yields are not really moving all too much so that is some relative comfort. US 10-year real yields are still stuck at -1.03% but gold is diverging slightly to the downside today.
Looking elsewhere, positioning is also something to consider as there has been a lack of enthusiasm in gold ETF purchases to start the new year:
For now, the technical picture is one that is tough to argue against as the break below the 200-day moving average (blue line) and key trendline support now highlights downside risks for gold towards $1,800 potentially.
February usually isn't a strong month for gold as the seasonal tailwind fades, so a push towards retesting the November low @ $1,764.80 isn't out of the picture here.
That said, I would expect dip buyers closer to that level with stronger conviction should price dip even further towards $1,700 in the bigger picture.