Takeaways
- Gold rose on Thursday following a steep drop yesterday as investors closely monitored developments in tariffs and economic outlook.
- Gold’s prices rose to new records earlier this week. Then, they reversed dramatically intraday to form a bearish candlestick pattern.
- Investors should watch key support levels on gold's chart around $3,145, $2,955, and $2,790, while also watching a critical overhead area near $3,500.
Gold (XAUUSD), after falling yesterday from a record-high, rebounded today as investors closely watched developments related to tariffs.
The precious metal reached its highest level of $3,500 per ounce in the first week of the week. Investors abandoned risky assets due to concerns over trade tensions between China and the U.S. as well as President Trump’s repeated criticisms against Federal Reserve Chair Jerome Powell. Gold prices dropped after Trump said tariffs against China would be reduced significantly and that he had no intention to fire Powell.
Gold’s price has risen by 28% since the beginning of the year. Investors are flocking to gold as a safe-haven asset, which is often seen as a hedge against rising costs. Gold was trading at around $3,350 on Thursday evening.
Below we will break down the technicals and identify key price levels for investors to track.
Indicators of a shift in momentum
Gold’s prices rose to new records earlier this week. Then, they reversed dramatically intraday to form a bearish candlestick pattern.
The recent move to the downside coincided with a steep decline in the relative Strength Index (RSI), below overbought level, indicating a significant momentum shift.
Zooming in, the commodity’s trend has been sharply upward since mid-December. It is a basic Elliot Wave with five distinct swings of price, which are then usually followed by a reversal phase.
We’ll identify three important support levels to watch on the XAUUSD chart and also locate a crucial overhead area that’s worth monitoring.
Monitor the Key Support Levels
Gold’s initial price could fall to $3,145 if the market continues to weaken. This area may offer support near the swing high of early April, which is at the 38.2% Fibonacci Retracement level.
The next lower area is at $2,955, which is just above the Fibonacci retracement of 61.8%. Investors should look for the opportunity to buy the yellow-metal in this region between the peak in February and the trough in April.
Bullion bulls failing to defend this level may trigger a move to lower support near 2,790. This area, just above the Fibonacci level of 78.6%, may attract interest in the vicinity of the October 2024 swing-high.
The Critical Overhead Area to Watch
Gold’s price could make a final attempt to reach $3,500. Tactical traders that have purchased recent weakness in the commodity may see this week’s record high as a good place to lock profits.
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As of the date of this article, the author did not own any securities listed above.
