Recent geopolitical tensions were a good reason for stocks to fizzle out. And now that the fears are easing, that also provides a good reason for gold to let off some steam as well. Gold made a few attempts to surpass $2,400 earlier this month, but failed to close the day above the key level. And now the price is starting to feel exhausted as it falls back to $2,300 on this day.
Gold Daily Chart (XAU/USD)
The last two months have been a real run on gold, with a gain of over 20% at one point. The argument for rising prices can easily be made too high, too fast. And with that comes the correction/retracement phase. Maybe that’s where we are right now.
The short term chart has already taken a turn in trading yesterday here. And the new drop today now calls into question the whole situation from a technical point of view. The daily chart highlights that we could see this latest drop extend further, with little downside support.
The Fibonacci retracement outline shows that we could see a push towards $2,260 at least before some semblance of support. This comes from the 38.2 Fib retracement level. The next key stop after this could be a push towards $2,200.
But as we mentioned yesterday, there is still a very strong case for gold to rise even further in the months to come. As such, this latest pullback is another dip buying opportunity. Stay alert for changes in market sentiment and rely on technicals as well. This is the best bet for making trades like this.
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