Gold eases back from overbought levels ahead of busy week
Gold was a touch lower at the time of writing. Earlier gains that were triggered by geopolitical tensions in the Middle East and risk-on moves in China last week. But the impact of those factors have faded.
Price action since Friday suggests that gold is approaching a potential short-term correction phase after its recent rally.
Overbought conditions indicated by the Relative Strength Index (RSI) across multiple time frames suggest that a period of consolidation or selling may occur soon.
Despite this, the long-term outlook for gold remains bullish, with central bank policies and ongoing purchases providing support. Indeed, with the broader trend being upward, gold remains on course to reaching $2700 in the short term and $3000 over time, with the next phase of the rally beginning perhaps when prices are no longer technically overbought.
This week, key US employment data, especially the JOLTS report and non-farm payrolls report, will likely influence gold's short-term direction.
Key Points:
By Fawad Razaqzada, market analyst with FOREX.com
Price action since Friday suggests that gold is approaching a potential short-term correction phase after its recent rally.
Overbought conditions indicated by the Relative Strength Index (RSI) across multiple time frames suggest that a period of consolidation or selling may occur soon.
Despite this, the long-term outlook for gold remains bullish, with central bank policies and ongoing purchases providing support. Indeed, with the broader trend being upward, gold remains on course to reaching $2700 in the short term and $3000 over time, with the next phase of the rally beginning perhaps when prices are no longer technically overbought.
This week, key US employment data, especially the JOLTS report and non-farm payrolls report, will likely influence gold's short-term direction.
Key Points:
- Escalation in the Middle East initially boosted gold, but profit-taking is expected to cool the rally.
- Overbought conditions across daily, weekly, and monthly RSIs signal potential for short-term correction.
- Long-term bullish outlook for gold remains intact due to favorable geopolitical and economic factors.
By Fawad Razaqzada, market analyst with FOREX.com
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