Gold Undergoes Short-Term Correction Within Uptrend Channel
Market Overview
Gold prices remain elevated as investors continue to seek safe-haven assets amid escalating trade tensions. The recent increase in import tariffs has not only disrupted international trade flows but also dampened global economic growth prospects. The resulting uncertainty has driven market participants toward risk-averse investments, reinforcing gold’s position as a preferred hedge.
Additionally, equity markets and cryptocurrencies have seen significant declines, further enhancing gold’s appeal as a stable asset. However, following its record-breaking rally on Monday, some profit-taking and short-term retracement are likely. Investors are now closely watching key economic data releases and Federal Reserve commentary for further cues on market direction.
Technical Analysis
On the hourly chart, gold remains within a highly reliable ascending channel, with an 89% validity rating. However, buyers are retreating after hitting the upper boundary, leading to the formation of a short-term double-top correction pattern. Price is now testing the neckline of this formation at 2812.42, a critical support level that could determine the next directional move.
As long as gold remains within this channel, the broader uptrend remains intact. However, a clear breakdown below 2812.42 would signal a deeper correction, with potential downside targets at 2809.12, 2804.92, and 2800.29.
Momentum oscillators indicate a shift in sentiment. The short-term RSI is neutral, while MACD is turning bearish, signaling waning bullish momentum. Moving averages are converging, further suggesting a slowdown in upward momentum, though no decisive trend reversal has been confirmed.
If buyers regain control, immediate resistance levels are located at 2817.05 and 2824.55. A breakout above 2824.55 would invalidate the current correction scenario and confirm a resumption of the previous rally.
Key Technical Levels
- Resistance Levels: 2817.05, 2824.55
- Support Levels: 2812.42, 2809.12, 2804.92, 2800.29
Fundamental Factors Driving Gold Prices
Despite strong fundamental demand, gold is facing mild selling pressure due to profit-taking following its recent rally. Furthermore, the US dollar remains firm, supported by better-than-expected economic data from the US. Monday’s positive ISM PMI report has raised expectations that upcoming US data, including factory orders and job openings, may also outperform forecasts, potentially bolstering the dollar and exerting short-term pressure on gold.
Upcoming Key Economic Events
- US Factory Orders (Tuesday) – Expected to indicate the strength of industrial demand.
- US Job Openings (JOLTS) (Tuesday) – A key employment indicator, influencing Fed policy outlook.
- Federal Reserve Speeches – Any hawkish or dovish commentary could impact gold and the US dollar.
Conclusion
Gold remains within an uptrend, but short-term corrective pressure is emerging. A break below 2812.42 could accelerate a pullback, while a breakout above 2824.55 would confirm trend continuation.
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