Introduction
Gold has extended its rally, clearing previous resistance levels decisively. However, while the trend remains bullish, momentum indicators are starting to flash potential caution signals. The market is entering a zone where prior rallies have faced profit-taking, making this a key zone to watch.
Technical Update
- Trend & Structure:
Price has continued to push higher, sustaining above the 50-day MA (3,429) and leaving the old 3,509 breakout level well behind. The uptrend structure remains intact. - Divergence Risk:
RSI has climbed to 70.9, pushing into overbought territory. On previous occasions (highlighted), similar RSI stretches coincided with short-term peaks. If price makes higher highs while RSI stalls, we could see a bearish divergence forming. - Momentum Context:
Despite the strong move, candles show signs of smaller body ranges, hinting that buying pressure may be slowing. - Support Levels:
- Immediate support sits at 3,509, the prior breakout zone.
- Secondary support at the 50-day MA (3,429), a key dynamic level that has underpinned this move.
Key Levels
| Level | Type | Note |
|---|---|---|
| 3,715 | Resistance | Latest rally high |
| 3,509 | Support | Breakout zone, now first defense |
| 3,429 | Support | 50-day MA, strong technical anchor |
| 3,119 | Support | 200-day MA, broader trend base |
Outlook
- Bull Case:
Continuation above 3,715 would signal buyers are ignoring momentum warnings, opening the door toward 3,800+. A macro bid (inflation hedge, risk aversion, or weak USD) could reinforce this scenario. - Bear Case:
If RSI divergence plays out, expect a pullback toward 3,509 or even 3,429. This would not break the uptrend but would reset stretched conditions before another attempt higher.
Final Takeaway
Gold remains firmly in a bullish uptrend, with the breakout holding above prior resistance. However, the RSI stretch and divergence risk suggest chasing fresh longs here may be late. A healthy pullback toward 3,509–3,429 would offer better risk-reward for bulls, while short-term traders should watch for topping signals.
