Gold prices are trading USD 4594.62 at the time of writing, amid persisting supply-chain crisis and geopolitical market risks prices have gained strong bullish momentum. Yet the metal’s price remains stubbornly high. The 21-day Simple Moving Average (SMA) has crossed above the 50-, 100-, and 200-day SMAs, increasing a bullish sentiment to traders. Gold is still holding above all key moving averages. After the rapid upswing, analysts are now looking to important support levels and looking for a price correction.
Gold’s recent turnaround has definitely taken center stage. As of writing, it is still maintaining above the key 50-day SMA, currently sitting at $4,255.76. This level is considered to be retest support, which offers protection in case the price faces any retractions. If gold breaks below this SMA, it will open the 100-day SMA at $4,044.74. Taken together, this sets the stage for an even bigger downturn.
Current Market Dynamics
Gold’s near-term dynamic support is represented by the 21-day SMA, now at $4,417.93. Provided the price continues to hold above this moving average, the bullish structure is still in place. Market analysts are confident gold prices will not fall back to pre-invasion levels. Provided they remain above these key support zones, corrections will be short-lived at best.
Gold’s 14-day Relative Strength Index (RSI) has skyrocketed to 70.17, putting it firmly in overbought territory. This other level shows that the asset is quite in overbought area. Yet even so, market pressures have only increased owing to ongoing supply-chain bottlenecks that are affecting nearly all sectors of the economy. Collectively, these dynamics have spurred increased demand for Gold as a safe-haven commodity, fueling its current historic price run-up.
Potential Price Corrections
The general mood is still very bullish. Yet a more hawkish-than-anticipated U.S. CPI print might set off a Gold bearish price drop, potentially forcing it back down towards the $4,480 support level. Investors should stay on the side of caution because extreme volatility in the market can lead to price instability. Meanwhile, gold remains on an upward trajectory. Indeed, as we explained a few months ago, many analysts expect it to skyrocket to new all-time highs near $4,700, particularly if the U.S. dollar starts crashing hard.
Gold’s recent ability to hold its ground above the 50 and 200 day key moving averages appears to indicate that the advances indeed intact. Traders have their eyes on what external economic conditions will mean for demand for Gold in the months ahead.
Outlook and Future Projections
With Gold recently trading around the $4,600 mark, investors are closely watching market indicators for clues to where the market may be headed next. Indeed, looking at strong technical indicators, Gold appears set to soar. At the same time, economic fundamentals lurk beneath the surface to fuel this optimism for continued expansion in the short term. We think it’s a very exciting time for trading! Gold maintains its bullish short-term bias while it remains above the 21-day SMA.
The continued rise in Gold prices could be further influenced by geopolitical tensions and economic shifts that affect investor sentiment. The balance between supply and demand will continue to be an early key as traders sail through these uncharted waters.