Gold technical analysis: Below $1,500, risks breaching three-month rising trendline

• Gold produced a candle with a long upper shadow on Thursday, reinforcing the short-term bearish bias.
• The yellow metal looks set to breach the support of the trendline rising from May 30 lows.

Gold is currently trading at $1,496 per Oz, representing 0.12% losses on the day, having hit a high of $1,501 in early Asia.

On Thursday, the yellow metal clocked a high of $1,524 before closing largely unchanged at $1,498. Essentially, Gold created a daily candle with a big upper shadow (sell on rise mentality), reinforcing the bearish view put forward by Sept. 6's double top breakdown.

So, a deeper drop to levels below $1,494 – the support of the trendline connecting May 30 and Aug. 1 highs – could be in the offing.

Supporting the bearish case is the below-50 reading on the relative strength index (RSI) and the risk-on sentiment in the financial markets. As of writing, the futures on the S&P 500 are reporting 0.10% gains. The index rallied by 0.29% on Thursday, courtesy of fading trade tensions and European Central Bank's (ECB) monetary easing.

The outlook would turn bullish if prices close today above $1,524 (Thursday's high), although that looks unlikely.

Daily chart

Trend: Bearish

Technical levels