Commodities Analysis by Fawad Razaqzada covering: XAU/USD, US Dollar Index Futures, Gold Futures, Crude Oil WTI Futures. Read Fawad Razaqzada's latest article on Investing.com
Gold pulled back at the start of the week as geopolitical tensions eased and the focus shifted to US economic data and earnings reports.
If yields remain supported again this week, I reckon this may exert some pressure on the technically overbought gold, unless investors perceive a risk of US default. Gold's unusual price movement persisted again during much of last week after detaching entirely from the US dollar and bond markets, as yields climbed alongside gold, which is very uncommon.
Typically, such a candlestick pattern would suggest a potential near-term peak, but gold's price behaviour has been far from typical. It has completely decoupled from both the US dollar and bond markets. Sellers appear to lack conviction at this stage. From a bearish perspective, a breakdown of key short-term support levels is needed to initiate at least a temporary bearish trend, and the weaker start may be a sign of things to come as we head deeper into today’s session and week.
But gold remains technically overbought on higher time frames like the daily, weekly, and monthly. The weekly RSI is still well above the 70.0 threshold despite easing back a little on the daily time frame, thanks to its recent consolidation. Further consolidation or a pullback is needed to work off the overbought conditions on the higher time frames.Be sure to check out InvestingPro to stay in sync with the market trend and what it means for your trading.
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