Navigating Gold’s Pullback: When to Make Your Move

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With gold pulling back from trend highs, we take a look at how deep the retracement is likely to be and how short-term swing traders can time their entry.

Why Gold Is on the Rise in 2024

Gold has been on a strong upward surge this year, with a combination of global demand, favourable interest rate expectations, and significant moves by central banks, particularly in India and China.

In India, a recent cut in gold import tariffs sparked a sharp rise in gold imports, pushing prices higher as demand for jewellery and bars surged. Meanwhile, expectations of US interest rate cuts have also driven gold’s appeal, as lower borrowing costs make non-yielding assets like gold more attractive.

These factors, combined with increased purchases by central banks, have created a perfect storm for spot gold prices to rise more than 25% this year.

Daily Candle Chart: The 9EMA and 21EMA Dynamic Support Zone

Gold has been trending higher, and the recent phase of this bullish trend shows prices repeatedly respecting the 9EMA and 21EMA areas. As prices pull back to these moving averages, we’ve seen rallies emerge, confirming the strength of the trend.

Last Thursday, gold hit new highs before pulling back, bringing prices down toward the 9EMA/21EMA dynamic support zone. It’s worth noting that before the pullback, the RSI had moved into overbought territory, indicating that a cooldown was likely.

While EMAs themselves aren’t guaranteed support levels, they’re excellent tools for identifying the character of the trend and where pullbacks may find a stopping point.

Gold Daily Candle Chart

Past performance is not a reliable indicator of future results

Hourly Candle Chart: Timing Your Entry

Traders looking to time their entry into gold’s pullback may want to zoom into the hourly chart…

Here, the pullback is currently forming a descending channel, which swing traders can use to pinpoint their move.

Aggressive traders usually focus on high-risk, high-reward opportunities, such as observing price movements near the channel lows, while others may watch for a breakout above the channel if accompanied by increased trading volume. This approach can potentially align short-term momentum with a broader bullish trend.

Gold Hourly Candle Chart

Past performance is not a reliable indicator of future results

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