Gold retraces on overbought condition

  • XAUUSD
    (${instrument.percentChange}%)

Weekly chart

Gold has pulled back today, giving the weekly candle an inverted hammer appearance. The weekly candle is still to open, but the selling tail does coincide with an overbought condition on the RSI (black ellipse). This decline is likely profit-taking, as markets bounce from overstretched levels and adopt a risk-on sentiment today as buyers look for bargains. In addition, geopolitical risks may broadly reflect in current prices; however, uncertainty still prevails. In this regard, gold as a safe haven is still an asset of interest, and pullbacks may find that they are supported. If the weekly stochastic oscillates around the 80+ levels, the longer-term momentum will be up.

Shorter-Term Analysis

The lefthand chart shows the daily timeframe for XAUUSD—price is in gold's bullish zone, between the upper blue and red bands. As long as the daily chart maintains in this area, it is bullish for the precious metal. The chart on the right shows XAUUSD's hourly timeframe. Gold has pulled back to a confluence of support, i.e., the S1 pivot overlaps price resistance turned support (green shaded horizontal). To assess the strength of this level, the EMAs and the stochastic need to turn positive (black ellipses). This bullishness will suggest that market participants are targeting the confluence and using it as a platform to "buy the dip." If this charts, the sentiment may be swiveling from risk-on to risk-off.

Featured Image by istara from Pixabay

Trade the News: View our Economic Calendar

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

Most Popular Shares AU Shares Forex Stock Baskets Forex Baskets Cryptocurrencies Indices Commodities

Most Popular

Shares

AU Shares

Forex

Baskets

Baskets

Cryptocurrencies

Indices

Commodities

Most Popular

Shares

AU Shares

Forex

Stock Baskets

Forex Baskets

Cryptocurrencies

Indices

Commodities

Most Popular

Shares

AU Shares

Forex

Stock Baskets

Forex Baskets

Cryptocurrencies

Indices

Commodities

Symbol Bid Ask Spread Change
${instrument.name} ${instrument.name} ${instrument.bid} ${instrument.ask} ${ instrument.spread | formatSpread } ${instrument.percentChange}%

Last Updated: ${lastUpdated}

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

Risk Warning: Our service includes products that are traded on margin and carry a risk of losses exceeding deposited funds, if you are a professional client. The products may not be suitable for all investors. Please ensure that you fully understand the risks involved.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}