Gold Retreats After Reaching New Highs, Uptrend Likely to Continue
Gold prices (XAU/USD) pulled back slightly on Thursday after a surge on Wednesday fueled by US economic data. The data suggested a potential interest rate cut by the Federal Reserve (Fed), which is positive for Gold.
Reasons for the Pullback:
- Profit-Taking: Investors are taking some profits after the strong rally on Wednesday.
- Overbought Market: Technical indicators like the Relative Strength Index (RSI) suggest the market might be overbought in the short term, leading to a potential correction.
Bullish Outlook Remains:
- Interest Rate Expectations: Expectations of lower interest rates remain a positive factor for Gold.
- Central Bank Demand: Continued demand for Gold from central banks, particularly in emerging markets, provides support.
- Geopolitical Tensions: Ongoing geopolitical risks and trade concerns add to the safe-haven appeal of Gold.
Technical Analysis:
- Uptrend Still Intact: Despite the pullback, the overall uptrend for Gold remains in place.
- Support and Resistance:
- Support level: A break below the current price range (around $2,370s) could indicate a deeper correction.
- Resistance levels: $2,400 (recently tested), $2,417 (April 19th high), and $2,430 (all-time high) are potential hurdles for further gains.
Overall:
The recent pullback is likely a short-term correction within a broader uptrend for Gold. The underlying factors supporting Gold, such as potential rate cuts, central bank demand, and geopolitical concerns, remain positive.