Gold prices are navigating a complex financial landscape as they remain elevated above $2,850 early Thursday. This comes amid broad US Dollar weakness and a cautious global mood. The 14-day Relative Strength Index (RSI) for gold hovers near 76.50, signaling an extremely overbought condition. With the precious metal's price consolidating recent gains, market analysts caution about a potential pullback.
Recent developments in international politics and economics are likely to influence gold's trajectory. Israeli Prime Minister Benjamin Netanyahu and former US President Donald Trump met Tuesday at the White House, potentially impacting Trump's tariff policies and the ongoing gold rally. As trade tensions take a backseat, focus turns to Friday's critical US Nonfarm Payrolls (NFP) data, which may further sway market sentiment.
The next significant target for gold is set at $3,000. However, with the Federal Reserve (Fed) and the Bank of Japan (BoJ) expected to diverge in policy directions, the path to this target remains uncertain. The Japanese Yen has surged to two-month highs against the US Dollar, reflecting these anticipated policy shifts. USD/JPY trades heavily near 152.00 during Thursday's Asian session, highlighting ongoing market volatility.
Gold remains overbought on the daily time frame, increasing the risk of a near-term correction. The article, however, does not constitute investment advice and is not authored by a registered investment advisor. Investors are reminded to consider their own financial circumstances before making any investment decisions.
The BoJ's stance continues to contrast with that of the Fed. BoJ policymaker Tamura advocates for additional rate hikes, which has bolstered the Japanese Yen further. Meanwhile, market participants have fully priced in a quarter-point Fed rate cut for July, with expectations of 46.3 percentage points of cuts by December's end.