With risk-on flows pouring into gold, increased demand has seen the precious metal price rise to decade highs. It appears to be the most talked-about asset this week and therefore makes our Chart of The Day.
The main element to point out on this four-hour chart is the bearish divergence pattern developing via the RSI (Relative Strength Index). It could be a sign of price action turning in the opposite direction.Considering how fast the price has risen to overbought territory, it makes sense that gold may have moved too quickly for the market. Perhaps a correction of some sort is required to provide price stability?
To the downside, notice the clustered area of weekly pivots in and around the 1420 price regions. It’s reasonable to consider that gold may find support at these levels.
If price continues to rally, it may be more likely to be driven by the fundamentals such as trade war news and developing geopolitical conflicts around the globe. The 1522 level which previously acted as support could perhaps morph into a new resistance price point.
Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg
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