Gold price has reached our $1,700 target after pulling back towards $1,600-$1,580 as expected by our past analysis. However the new high in Gold was not followed by a higher high in the RSI and we have a second lower top in this oscillator. This is a bearish divergence with high significance.
Green lines - bearish divergence
Gold price has made another higher high. Trend remains bullish as price is still inside the longer-term upward sloping channel. However the warning by the bearish divergence in the RSI makes me want to take profits and be at least neutral at current levels. Short-term support is found at $1.633 and a daily close below this level will increase the chances of a bigger reversal even towards $1,570-80 area again.
Green lines -bearish divergence
The bearish divergence is evident in the weekly chart as well. Gold price is most probably topping and a healthy pull back towards $1,500 is my main scenario. Gold has most probably completed the upward move that started around $1,170 and it is time to make a retracement of this move. We have only short-term reversal signals and no confirmation of this scenario yet. One thing is for sure, buying Gold at current levels is very risky.
