The rapid climb of Gold has overloaded it considerably, with some analysts warning that the market is overheated. The Relative Strength Index (RSI) has been in Overbough Territorium for several days, which appeals to the expectations of a retracement in the short term. Moreover, the gap between the recent High and the 50-day advancing average at $ 2,702.43 is unusually wide. Historically, such a spread on an overbough market indicates that may be due to a correction.
If a reversing pattern confirms today, gold can see a decrease in 2-3 days, with important downward goals at the 50%retracement levels. These include small support at $ 2,888.52, $ 2,857.49 and $ 2,836.67, with stronger support near $ 2,763.34.
Trade War fear the demand for Stoke Safe-Haven
The recent rally of Gold was largely powered by Trump’s decision to impose a flat rate of 25% on steel and aluminum import, escalating fears for a multi-front trade war. The relocation, which has no exemptions, is expected to influence the world markets and increase the inflatio pressure in the US economy.
Uncertainty about Trump’s policy has strengthened the attraction of Gold as a cover, with some traders marking the psychological $ 3,000 as the next important level. US Gold Futures hold a light premium and acts at $ 2,936.10 compared to the current level of Spot Gold.
Fed Policy and Inflation Data in Focus
Traders now follow the Federal Reserve chairman Jerome Powell’s Testimony and the American inflation data on Wednesday for instructions on future interest rate movements. A poll by Reuters suggests that the FED will probably stop until the next quarter to follow the rates, especially if inflation peaks through higher import costs.
The Bullish Momentum of Gold can get stuck if Powell indicates a more ragged attitude or surprise the benefit if inflation data. Higher interest rates would dampen Gold’s appeal, because it is usually non-leading asset that the loan costs rise. Conversely, a Dovish -Fed -Outlook or weaker inflation data can strengthen the upward trend of Gold.