Technically, gold futures prices remain under pressure and could experience liquidation on a close below $1,620. Implied volatility on gold prices has started to percolate after drifting lower for most of January.
Implied volatility (which is used to price options on futures) on the GLD ETF (which holds gold futures contracts) has moved to the upper end of the current range and likely will breakout to the upside if gold futures prices break down below $1,620. The recent prints of implied volatility near 10.5% in January were the lowest levels of implied volatility on gold futures prices seen during the past 52-weeks.
Momentum on gold futures prices has turned negative with the MACD (moving average convergence divergence index) generating a sell signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses below the nine-day moving average of the spread. The index has moved from positive to negative territory confirming the sell signal on the MACD.
The RSI (relative strength index), which is an oscillator that measures overbought and oversold levels has moved below 40 and is now printing near 39, which is on the lower end of the neutral range. Given the RSI is not in oversold territory a breakdown in price action will not likely be met with strong support.