The spot price of gold (XAU/USD) concluded another week in positive territory, adding +4.3% and refreshing record pinnacles at $2,330/ounce amid expectations of lower rates this year, geopolitical tensions and speculative buying.
There’s no denying that the yellow metal is exhibiting an uptrend and has been since pencilling in a bottom around the $1,614 area in late 2022. Knowing we have a clear uptrend in the longer term (see weekly and daily charts) and are essentially void of any resistance, many traders/investors will be seeking out dip-buying opportunities. Now, in terms of support on the weekly and daily charts, the former shines the technical headlights towards $2,147 as possible support, but this would take a meaningful correction to reach. Meanwhile, on the daily scale, support is located at $2,280, with a break under here likely to see the yellow metal call in on support from $2,223.
Looking at the shorter-term H1 chart, the support level that jumps out is $2,304, which may provide a technical floor should a correction unfold this week. Below here is the daily support mentioned above at $2,280.
RSI Heavily Overbought; Correction or Reversal?
The Relative Strength Index (RSI) on the weekly chart shows that the indicator is testing levels not seen since 2020. We’re also seeing early signs of negative divergence on the daily chart’s RSI ahead of indicator resistance at 87.21, a level extended from as far back as August 2020.
While the RSI signals should not be overlooked, the strength behind the bulls now is undeniable. Another point worth taking on board is that the RSI can remain overbought for prolonged periods in strong trending environments and deliver several false bearish signals. Consequently, the current signals out of the RSI are unlikely to prompt a reversal, more a correction this week, mostly fuelled by profit-taking, and the move is unlikely to breach bids from daily support at $2,280.
Dip Buyers Eye Support
In view of the above, any correction in this market this week will see current buyers look to perhaps pyramid their positions or join the uptrend. H1 support from $2,304 will be the first port of call were a correction observed, followed by the daily support at $2,280.
There’s no denying that the yellow metal is exhibiting an uptrend and has been since pencilling in a bottom around the $1,614 area in late 2022. Knowing we have a clear uptrend in the longer term (see weekly and daily charts) and are essentially void of any resistance, many traders/investors will be seeking out dip-buying opportunities. Now, in terms of support on the weekly and daily charts, the former shines the technical headlights towards $2,147 as possible support, but this would take a meaningful correction to reach. Meanwhile, on the daily scale, support is located at $2,280, with a break under here likely to see the yellow metal call in on support from $2,223.
Looking at the shorter-term H1 chart, the support level that jumps out is $2,304, which may provide a technical floor should a correction unfold this week. Below here is the daily support mentioned above at $2,280.
RSI Heavily Overbought; Correction or Reversal?
The Relative Strength Index (RSI) on the weekly chart shows that the indicator is testing levels not seen since 2020. We’re also seeing early signs of negative divergence on the daily chart’s RSI ahead of indicator resistance at 87.21, a level extended from as far back as August 2020.
While the RSI signals should not be overlooked, the strength behind the bulls now is undeniable. Another point worth taking on board is that the RSI can remain overbought for prolonged periods in strong trending environments and deliver several false bearish signals. Consequently, the current signals out of the RSI are unlikely to prompt a reversal, more a correction this week, mostly fuelled by profit-taking, and the move is unlikely to breach bids from daily support at $2,280.
Dip Buyers Eye Support
In view of the above, any correction in this market this week will see current buyers look to perhaps pyramid their positions or join the uptrend. H1 support from $2,304 will be the first port of call were a correction observed, followed by the daily support at $2,280.
Comment:
H1 support was respected in early Asia and rallied to fresh ATHs!