XAU/USD capped by dense supply area at $1,190

On Wednesday, the bullion declined once again and pierced through a considerable support lines' area around $1,190, then represented by the weekly PP and 23.6% Fibo retracement. At the moment these lines, accompanied by the new monthly PP, 20 and 55-day SMAs are acting as a very strong supply zone, which may push Gold further to the downside. In the near term the yellow metal is likely to try to return back up to $1,200, but we tend to believe technical indicators, which are now giving bearish signals on all time-frames.

Distribution between opened positions for buying and selling Gold is still remaining strongly positive and in favor of former, as bulls have a majority with 66% of all trades. From December 31, however, bulls have decreased their advantage by seven percentage points, reaching the worst sentiment in 13 trading days.