The price of gold has shown little movement since the beginning of the week, remaining close to its recent record high of $3500. However, the precious metal appears to be consolidating above the 50-day Simple Moving Average (SMA) at $3042, defending the weekly low of $3260.
Gold’s price action is currently influenced by its position above the moving average, and the ongoing shifts in US trade policy may continue to provide support for the metal, offering a safe haven alternative to fiat currencies.
Despite this, the price of gold is experiencing range-bound movement, which could be temporary, as global economic uncertainty—exacerbated by the potential for a trade war—clouds the outlook. If gold fails to defend the current weekly low of $3260, further declines could be imminent. The Relative Strength Index (RSI), which has retreated from overbought territory, signals that momentum may be weakening.
A closer look at the daily chart for XAU/USD reveals a recent pullback in gold prices, with the RSI falling below the 70-mark. The failure to hold above the $3280 level—representing the 100% Fibonacci extension—could prompt a further decline, with the next support levels appearing between $3160 (161.8% Fibonacci extension) and $3190 (78.6% Fibonacci extension).
Looking ahead, the next significant support level is at $3120 (61.8% Fibonacci extension). However, if gold manages to maintain its position above $3280, it may continue to move within the current weekly range.
On the bullish side, a break above the monthly high of $3500 would shift focus to the next target at $3540, marked by the 161.8% Fibonacci extension.
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