Gold Price Correction Looms

Summary:

The fervor for gold is at an all-time high, but caution is warranted as the long positions become increasingly crowded. A correction in gold prices could be just around the corner.

SELL XAUUSD

Close Time

CLOSED

2778.32

Entry Price

2761.00

2806.00

5107.16 +110.75 +2.22%

173.2

Pips

Profit

2761.00

2760.95

Exit Price

2778.32

Entry Price

2806.00

Fundamentals

Over the recent period, despite the market's reduced bets on substantial rate cuts by the Fed and the continued strength of the US dollar and Treasury yields, gold has chosen to ignore these factors. Instead, it has surged under the safe-haven support provided by geopolitical tensions and uncertainties surrounding the US elections. The glittering trajectory of gold prices continues, seemingly detached from both fundamental and technicals, currently pressuring the $2800 mark.

However, as we approach this significant psychological threshold of $2800, there is a degree of hesitancy among bulls to continue chasing the uptrend. A pullback could be imminent. Nevertheless, the enthusiasm for gold remains high, with the upward trend in gold prices being very robust. Even if a correction occurs, it is expected to be relatively mild.

Technical Analysis

In the 4-hour chart, XAUUSD encountered resistance below $2790, with the upward momentum temporarily slowing down, and the short-term being severely overbought. There is a risk of overcrowded long positions, which could lead to a reversal and a drop in gold prices. However, the dominant trend is clearly upward. As gold prices repeatedly set new historical records, this trend becomes more entrenched. Every price dip is quickly followed by a rebound. The $2760 level might be a strong support point. Only a breach below $2750 could lead to a more profound adjustment.

For short-term traders, it is advised to exercise caution in chasing long positions. Traders can attempt to take a position for a pullback as prices approach $2788. The target is set at $2760, with the stop loss placed above $2800.

Trading Recommendations

Trading Direction: Sell

Entry Price: 2787

Target Price: 2761

Stop Loss: 2806

Support: 2760/2770

Resistance: 2790/2800

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