Introduction
Gold futures have extended their breakout since our previous analysis, pushing into new highs and printing $3,715.2 before easing slightly. While momentum remains strong, the overbought RSI and evening star from Tuesday could mean a pause in the rally for the moment.
Let’s take a closer look…
Technical Analysis
Fundamentals
Gold’s latest rally is being fueled by a mix of softer U.S. data that boosts Fed rate-cut expectations, persistently low real yields, and a weaker dollar. Inflation uncertainty and geopolitical risk are pushing investors into safe havens, while central bank and institutional buying add support too.
What Could Affect Gold In The Future
- Fed meetings: If the Fed signals multiple cuts are coming, gold likely extends its gains. If they point toward just one, that could soften the rally.
- Inflation: If inflation stays high or starts rising again, gold looks more attractive as protection. But if inflation falls quickly, gold could lose its appeal.
- China growth: If China’s economy shows weakness, investors worry about a global slowdown and turn to gold. But if China bounces back strongly, money is more likely to flow into stocks and other riskier assets instead.
- U.S. dollar moves: Any strength from the Dollar will make it more difficult for Gold to rally; however, continued weakness gives even more upside potential.
Technical Analysis
The RSI is overbought at 73.13, which is the highest it’s been since April. Even though the yellow metal is in a strong and steady uptrend, traders generally avoid adding to positions when the relative strength index is at levels like this.
Support & Resistance
- Immediate resistance: $3,715.2 (recent peak & ATH).
- Secondary upside targets: $3,800 and $3,900 if momentum persists.
- Support levels:
- $3,510 (breakout retest zone).
- $3,429 (50-day MA).
- $3,120 (200-day MA, long-term structural support).
Key Levels
| Level | Type | Note |
|---|---|---|
| 3,900 | Resistance | Psychological extension target |
| 3,800 | Resistance | Next upside projection |
| 3,715 | Resistance | Recent high |
| 3,509 | Support | Breakout retest, key pivot |
| 3,429 | Support | 50-day MA |
| 3,120 | Support | 200-day MA, trend floor |
Outlook
- Bull case: Sustaining above $3,510 keeps gold in breakout mode, with potential to test $3,800–3,900 as momentum carries. Fed dovishness, persistent geopolitical risk, and equity wobbles would further support the upside potential.
- Bear case: A rejection at $3,715 and loss of $3,510 could be a temporary failed breakout, triggering profit-taking and mean reversion toward the 50-day MA ($3,429).
Ending Off
Gold has delivered a clean breakout from the $3,510 consolidation and now trades in price discovery mode. The immediate challenge is the overbought RSI, which raises the odds of short-term pullbacks. However, as long as price holds above $3,510, the broader bull trend remains intact and favors higher levels into Q4.
