Gold prices are currently at a critical juncture, attempting to retest the upper band of its daily channel, which is situated at $3,310. This move comes after the price seemingly rejected both the 20-day moving average and the four-hour moving average, indicating a struggle for upward momentum. A significant obstacle for any potential downward movement within this channel is the 200-day moving average, which lies concurrently with the psychological level of $3,300. The fact that the price is currently situated between these two major moving averages suggests a degree of market hesitation and indecision, though clarity is anticipated by the weekly close. A successful bounce from the upper band of the channel would signal that gold prices are poised to retest the resistance level spanning between $3,375 and $3,390 points. Conversely, a decisive break below the 200-day moving average would indicate a shift in sentiment, potentially leading to support being found between $3,275 and $3,290 points. Traders should closely monitor broader market sentiment, as a sustained push towards new all-time highs by US stock indices could exert further downward pressure on gold, given its traditional role as a safe-haven asset.
Gold prices initially broke out of their daily downtrend channel on Monday, a move strongly supported by a weaker US dollar at the start of the week. However, the ongoing bearish daily chart pattern is undermining this momentum, even as it sets a new record high. The daily Relative Strength Index (RSI), while remaining above 50, appears neutral, indicating only a slight bullish bias. The 50-day moving average is still lagging behind the recent gains made in late May, suggesting that the current rally might be overextended relative to its medium-term average. Gold is currently positioned at the $3,330 pivot point, and the market awaits to see if this recent pullback will result in a re-entry into the daily channel. Despite a general risk appetite prevalent this week, gold has managed a steady rise. However, the stronger-than-expected nonfarm payrolls report released this morning failed to provide any further impetus for the safe-haven asset, suggesting that positive economic data can still temper gold's appeal. The pullback observed from higher levels implies that the probability of gold retesting its all-time high of $3,500 is currently low. Nevertheless, given the inherent volatility witnessed this year, any outcome remains possible. While gold initially surged by 3% from its weekly low, it is now up only 1.26%, highlighting the struggle to maintain higher ground. Technical analysis based on the current situation indicates a cautious outlook, with critical levels defining the next likely move.
