- Gold is trading lower today, but close to recent highs
- It failed to benefit from Friday’s negative stock market reaction
- Momentum indicators remain mixed
Gold is trading lower again today, recording its second consecutive red candle, but remaining a tad below its recent all-time high of $2,532. Last Friday’s non-farm payrolls figure resulted in an acute market reaction with the S&P 500 index recording its worst weekly performance since 2023, but gold failed to benefit. Similarly, developments in both the Middle East and the Ukraine-Russia conflict continue to have little impact on gold prices.
In the meantime, the momentum indicators remain mixed. The RSI remains above its midpoint but shows little appetite for a move higher. Similarly, the Average Directional Movement Index (ADX) is hovering well below its 25 midpoint, thus revealing a trendless gold market. More importantly, the stochastic oscillator has crossed below both its moving average (MA) and overbought territory, and it is currently tentatively edging lower. Should this move pick up pace, it could be seen as a strong bearish signal.
If the bulls remain confident, they could try to regain the market reins and gradually overcome the all-time high at 2,532. If successful, they would enter uncharted waters again, with the next plausible target being the 2,600 level, which coincided with the 261.8% Fibonacci extension of March 8, 2022 – September 28, 2022 downtrend.
On the flip side, the bears are keen for the current correction to accelerate. They could push gold towards the 2,431-2,448 area, which is defined by the April 12, 2024 high and the 50-day simple moving average (SMA). Even lower, the 100-day SMA and the 161.8% Fibonacci extension at 2,390 and 2,351 respectively, a tad above the lower boundary of the developing rectangle at 2,291, could really trouble the bears.
To sum up, gold is in the red again today despite the decreasing risk appetite as the market is digesting last week’s US data releases and preparing for another action-packed week.
