The gold markets are experiencing a corrective downside as trading started on the defensive early on Monday. Despite the rough start, the gold price is not down and out yet, retaining its ’buy-the-dips’ moniker. As long as the key support level at $2,950 holds, traders should be bullish. The 21-day Simple Moving Average (SMA) and the triangle support confluence have amplified this key support. This results in a high and difficult hurdle for would-be retail sellers to clear. In markets risk-on turns to risk-off quickly with the dynamics changing often. If buyers do get back in control, gold prices would have much room to go up.
Gold Price Bears Pressured by Risk-On Sentiment
Monday opened with gold prices maintaining a weak tone, trading below last week’s low of $2,982. This sharp decline can largely be explained by a risk-on market profile that has piled even more pressure on gold price bears. Without getting too deep into the weeds here, risk sentiment is a major driving factor behind price action. Investors are paying exceptionally close attention to global economic developments and positioning their portfolios accordingly.
Gold is continuing last Friday’s sharp correction from its all-time high of $3,058. The 14-day Relative Strength Index (RSI) is still heading down. This indicates a potentially healthy retracement and implies a positive bullish momentum returning to the market. This bearish advance may be temporary if buyers succeed at taking advantage of pullbacks near the key foothold.
Testing Key Price Levels
The gold market is now moving back and forth across some important longitudinal price points. Yet threatening to retest Friday’s bottom at $3,000, the crypto market is cautious but hopeful that a real recovery is on the way. Observers anticipate that if gold manages to defend its support zone successfully, it could retest the record high of $3,058, provided buyers regain their footing.
So perhaps the ‘buy-the-dips’ strategy is still a valid method as long as support at the $2,950 level stays strong. This level has recently become a point of emphasis. It’s consistent with all sorts of technical indicators, such as the 21-day SMA and the triangle formation that has developed in the early part of this month. The expectation of a confirmed breakout from the ascending triangle has reestablished a bullish gold outlook. This recent development has encouraged investors to remain hotly optimistic about future profits.
Challenges Ahead for Gold Sellers
The dilemma for prospective sellers has to be getting past the strong support between $2,950 & $2900. This level is proving to be a great challenge as it is a multi-dimensional barrier, with both trendline support & moving average convergence. Consequently, a move below this threshold would take considerable selling urgency and would likely indicate a profound change in the market’s mood.
Abject of such an advancement, traders are almost certain to keep seeing gold as a ‘buy-the-dips’ prospect. The market's resilience at current levels suggests that while temporary corrections can occur, the broader trend remains supportive of further gains. As a result, investors need to be vigilant about the risk factors that might change positive sentiment. Finally, it’s worth noting that considerable volatility could certainly take place in these next sessions.