Gold sell

Gold may go into correction amid overbought conditions and fundamental uncertainty

15 April 2024 151
Gold may go into correction amid overbought conditions and fundamental uncertainty

Gold prices rose slightly on Monday, remaining below a record high reached at the end of last week. Growing geopolitical tensions in the Middle East increased interest in gold as a safe haven asset.


The first direct attack by Iran on Israel increases investors' fears about a possibility of a major military conflict. In this situation, gold price exceeded $2 400 per ounce on Friday. However, by the end of trading, it dropped as investors began to close their risk positions.


Recent U.S. economic data on the labor market and inflation has once again caused market expectations for a Federal Reserve interest rate cut to be lowered. High interest rates are holding back non-yielding gold.


Meanwhile, inflation dynamics in the eurozone differ from the U.S., as ECB President Christine Lagarde insists. However, according to her, the region will still face the same problems, which limits the possibility of slowing down price growth.


This week, several Fed officials will mark the future monetary policy. Given the current sentiment among central bank officials to keep interest rates on hold in June, gold may show a corrective move.


From a technical point of view, gold quotes on the H4 chart demonstrate the formation of an upward trend. Divergence of the Relative Strength Index (RSI) indicator (standard values) shows a possible change in price direction downward within the upward channel.


Fundamental factors keep interest in buying gold, so traders are looking for more favorable conditions for opening long positions.


Signal:

The short-term outlook for Gold is to sell.

The target is at the level of 2270.00.

Part of the profit should be taken near the level of 2323.00.

A stop-loss could be placed at the level of 2435.00.

 

The bearish trend is short-term, so trade volume should not exceed 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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