After months of robust gains, gold futures appear to be losing steam, with prices stalling just shy of last month’s high. As the bullish momentum that has defined much of 2024 begins to wane, market participants are watching closely for signs of a deeper pullback.
Gold’s powerful uptrend was ignited in March 2024, triggered by a breakout from an inverted head and shoulders pattern. That move propelled prices to a target near $2,800 within seven months. After a brief retracement, bullish sentiment regained control, pushing gold futures to a peak of $3,500.
However, with just one week remaining in May, gold looks set to post its first monthly lower high of the year. Prices have encountered firm resistance around the $3,400 mark — just below the all-time high — and are on track to close the month with a spinning top doji, a candlestick pattern that often signals indecision in the market.
Technical indicators support the possibility of a cooling phase. The monthly Relative Strength Index (RSI-14) remains deeply overbought, and a bearish divergence has emerged in the RSI (2), which is typically used to spot short-term exhaustion.
Support has thus far held at the 23.6% Fibonacci retracement level, near $3,140. A sustained break below this zone could open the door to deeper losses, with the next key support at the 38.2% retracement level near the $2,900 mark and the 10-month simple moving average (SMA).
Short-Term Technicals Hint at Caution
On the weekly chart, price action has turned noticeably choppier, echoing the bearish divergence seen on the shorter-term RSI (2). Meanwhile, the daily chart suggests a corrective ABC pattern — previously forecast by some analysts — may have run its course. Wave C found support around the long-term 23.6% Fibonacci retracement and the 100% projection from wave A to B. Additionally, recent lows have remained above a short-term 61.8% Fibonacci level, hinting that gold may be reluctant to breach the $3,180 level in the immediate future.
Nonetheless, a bearish outside day formed on Thursday, and the RSI (2) surged to 89.7 — nearing the widely watched overbought threshold of 90. This technical setup suggests a near-term pullback toward the 50-day SMA, currently hovering around the $3,200 level, could be imminent.
The $3,180–$3,200 support zone will be critical in determining gold’s next move. A successful defense of this level may signal the completion of the corrective phase and set the stage for another rally toward new highs. Conversely, a break below could confirm a more prolonged correction is underway.
As gold continues to trade near historic levels, investors and traders alike will be watching price action closely for clues to the next major move in the precious metal’s ongoing bull market.
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