Gold Analysis: Correction Ahead?
Gold could be approaching a correction, with signs of overbought conditions emerging. The Relative Strength Index (RSI) is flashing above 70 on daily, weekly, and even monthly scales, a level not seen since the 2020 pandemic surge. Historically, this has indicated either a multi-day consolidation or a period of selling pressure as investors take profits.
Despite these indicators, gold remains in a strong uptrend, with the precious metal recently breaching $2600 and showing potential to reach $2700 in the near term. Any pullback is likely to be viewed as an opportunity for dip buyers. Key support levels to watch include $2600, followed by $2530 and $2500, where this year’s bullish trend could be tested.
While short-term weakness may arise, the long-term outlook for gold remains bullish, with a $3000 target still in sight. Factors supporting this view include global central banks accelerating rate cuts, ongoing geopolitical uncertainties, and sustained gold purchases by central banks. These conditions create a favorable environment for gold's continued strength, despite any potential profit-taking in the near future.
By Fawad Razaqzada, market analyst at FOREX.com
Despite these indicators, gold remains in a strong uptrend, with the precious metal recently breaching $2600 and showing potential to reach $2700 in the near term. Any pullback is likely to be viewed as an opportunity for dip buyers. Key support levels to watch include $2600, followed by $2530 and $2500, where this year’s bullish trend could be tested.
While short-term weakness may arise, the long-term outlook for gold remains bullish, with a $3000 target still in sight. Factors supporting this view include global central banks accelerating rate cuts, ongoing geopolitical uncertainties, and sustained gold purchases by central banks. These conditions create a favorable environment for gold's continued strength, despite any potential profit-taking in the near future.
By Fawad Razaqzada, market analyst at FOREX.com
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