Since the beginning of the year, the commodity gained more than 8.5% but this past week was plunged over 2.0% and made a phase change, shifting from a warning to a distribution phase.
Last week the precious metal dived with a wide range and closed near the low of the week, in addition the commodity managed to close below the previous week low, which suggests a strong bearish momentum.
The stochastic is showing an oversold market although it continues to display bearish momentum.
Gold broke below the consolidation zone 61.8 Fibonacci retracement level at 1,263.08 where it may re-test before resuming its downward trend.
Expecting an upward move to a Fibonacci retracement level at 1,263.08 on a bounce from a key level at 1,240.78 (scenario 1) however a bounce from the Fibonacci retracement level at 1,263.08 may trigger another bearish run down to the key level at 1,240.78 (scenario 2).