With the ECB rate cut providing volatility in the markets, Gold was not unaffected by it. Gold prices reached the resistance level at 1,325 once the rate cut decision was announced, and then pulled back down below the recent low at 1,306 towards 1,295 which was the middle of our next target (1,300-1,290).

The downward move was very fast and only lasted for a couple of hours. From then on, prices are sliding upwards above 1,300 again. Important levels to watch now are 1,325 and 1,290.

The longer-term picture is favorable for bulls for the time being. The decline looks corrective and has stopped just above the 61,8% Fibonacci retracement. If prices break below that retracement, then the bullish scenario will still be valid, but with much lower chances. The first thing bulls will need to watch out are the support at 1,290, and will then need to break above the resistance at 1,325. Once the resistance is broken, our next level to watch is the recent high at 1,360. Bears, on the other hand, will feel comfortable, as long as prices trade below 1,325. They need prices to break below 1,290 in order to diminish the bullish scenario chances.