👀 Ones to watch: The MOST undervalued shares to buy right nowSee Undervalued Shares

The Gold Bubble Looks Ready to Burst

Published 12/03/2024, 01:42 am
XAU/USD
0.11%
GC
0.03%

On analyzing spot gold and gold futures in the daily chart since December 4, 2023, I find futures, after hitting a new peak at $2203, have entered the overbought territory amid mere expectations for lower interest rates this year.
Gold Futures Daily Chart

Gold Spot Daily Chart
Both spot gold and futures hit fresh heights on Friday after comments from U.S. Federal Reserve Chair Jerome Powell, who raised expectations for lower interest rates this year.

Observations

Gold looks ready to retreat, as mere expectations for lower interest rates can’t keep futures prices above $2192 nor spot prices above $2189 for a long.

Economic data, announced before Powell’s second appearance, looks quite supportive for equity markets and indicates limited upside for precious metals.

A steep slide awaits the yellow metal.

Shrinking the opportunity cost of holding non-yielding bullion will add more exhaustion in upcoming trading sessions. Gold bears could push futures to a low at $1987 before March 27, 2024.

Conclusion

Gold futures look ready to reverse from the overbought territory.

On the flip side, gold futures could reach $2204, while the second resistance could be at $2227.

Gold spot could face first resistance at $2199, while the second resistance could be at $2215.

Gold bears could have their target for spot gold at $1974 and futures at $1986 by March 27, 2024.

On the first trading session of this week, gold futures started with a little gap-down opening at $2181.73, hit the day’s high at $2189.11, struggling to defend the day’s low at $2174.94 due to the thick presence of bears in the overbought territory.

It is clear that gold futures have completed the formation of a bearish candle in the daily chart and could get a confirmation candle on Tuesday before sliding further.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

***

Disclaimer: The author of this analysis may or may not have any position in the Gold futures. All the Readers are requested to take any long or short trading position at their own risk.

Which stock should you buy in your very next trade?

With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Unsure where to invest next? Get access to our proven portfolios and discover high-potential opportunities.

In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record.

With portfolios tailored for Dow stocks, S&P stocks, Tech stocks, and Mid Cap stocks, you can explore various wealth-building strategies.

Unlock ProPicks AI
Read Next

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.