Gold Price Analysis: Signs of Reversal Amidst Strong US Economic

Gold opened Tuesday's session with a surge to a new high, but as of the time of writing, the precious metal is experiencing a slight loss of momentum. A short-term analysis reveals a potential Double Top formation with RSI divergence, suggesting a looming reversal in price.

On the USD front, business activity in the United States surged in March, as indicated by the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) and S&P Global data. The ISM Manufacturing PMI exceeded expectations and marked a significant improvement over February's figures. This positive economic outlook in the US may deter the Federal Reserve (Fed) from pursuing interest rate cuts.

The expansion of the ISM Manufacturing PMI for the first time since September 2022 has driven US Treasury bond yields higher, posing a challenge for gold, a non-yielding asset. Investors are now inclined to capitalize on US treasuries over gold, anticipating higher returns amidst expectations of rising interest rates.

Given these developments, we are anticipating a potential short position in gold, as the strength of the US economy may prompt traders holding long positions in gold to close their positions.