Since early March, gold has been in the severe technical overbought condition. An extra driver of the rapid price growth has been a flow to safe havens amid trade tensions and uncertainty. While looking at the gold’s weekly chart, one can notice that the price is going up almost vertically. The longest monthly candle since 2000 occurred in April. Gold is vastly overvalued as a hedge against risks. From the technical point of view, such patterns are not the market’s favorite and are always subject to correction as prices are being balanced.
On the fundamental level, gold price direction is fueled by the US administration’s softer stance on global trade. What’s underway is a gradual process of easing or in some cases even lifting tariffs on China, one of the major US trading partners. No more aggressive statements are heard, which gives hope for a partial and slow recovery of the markets.
For a few months, the technical target of the gold price decline will be the level of $2,800 per troy ounce, but it is unlikely that the price will reach it with long bearish candles. The most probable scenario is a long consolidation in downward channels. Time frames of similar patterns suggest that a return to the level of 2,800 may even take a couple of years in the current situation.
It is better to shift attention to short-term targets. One of them is the level of 3,250, which gold is likely to reach in the nearest future. The hourly chart shows that the price is trying to consolidate at 3,300 and has already approached it four times from above. A confident break of 3,300 will open the path to 3,250.
The overall recommendation is to sell gold.
Profits should be taken at the level of 3,250. A Stop loss could be set at the level of 3,400.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
