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Gold Analysis: Strong and Sharp Overbought Levels

  • During yesterday's trading session, the gold price rose to a new historical record high of $2365 per ounce.
  • It is continuing its upward trend for the eighth session amid strong trading momentum and strong demand for safe havens.

Gold Analysis Today 10/4: Strong Overbought Levels (graph)

Meanwhile, the gold price is stabilizing around $2355 per ounce at the start of Wednesday's trading session before the announcement of the US inflation figures, and the content of the minutes of the last meeting of the US Federal Reserve. It will have a strong and direct reaction on the US dollar price and thus on the gold price. Moreover, the gold market gains came as many central regulatory bodies in Asia and some Eastern European countries have increased their purchases of bullion this year, with the People's Bank of China increasing its gold reserves for the 17th consecutive month to a total of 72.75 million troy ounces in March. At the same time, Bank of America expects the gold price to rise to $3000 per ounce by 2025.

What are other reasons for the rise in the gold price to its record levels?

The rise in gold prices may be driven by geopolitical tensions in Ukraine and the Middle East, as well as stubborn global inflation. Despite concerns about the delay in the Federal Reserve's easing of US interest rates, investors have focused on protecting themselves against rising price pressures. Now, market attention will turn to the upcoming release of the Federal Open Market Committee (FOMC) meeting minutes and US consumer price index data for more information on the direction of interest rates.

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    What is the expected gold price in the near future?

    According to gold trading platforms, the gold price has risen by $290.42 per ounce, or 14.08%, since the beginning of 2024, according to trading on the contract for difference (CFD) which tracks the benchmark market for this commodity. Gold is expected to trade at $2273.85 per ounce by the end of this quarter, according to global macroeconomic models and analyst expectations. Looking ahead, we expect it to trade at $2500 per ounce in 12 months.

    Amid this performance, the yield on 10-year US Treasury notes fell to 4.37% on Tuesday, after reaching 4.46% on Monday, the highest level in four and a half months. Overall, traders are preparing for the release of US inflation today to adjust their bets on the timing of a US rate cut by the Federal Reserve. Currently, the probability of a cut in June is around 57%, down from 60% earlier in the month. Last week, hawkish comments from several Fed officials, coupled with strong employment and manufacturing data, raised investor concerns that interest rates will need to stay higher for longer. Policymakers, including Fed Chairman Powell, suggest that a rate cut on federal funds this year may be appropriate, but there is no need to rush it as the Fed needs more confidence that inflation is moving sustainably back to 2%.

    Gold Price Forecast and Analysis Today:

    The general trend of the gold price is still sharply bullish and according to the performance on the daily chart the gold gains have moved all technical indicators towards strong overbought levels. Therefore, it is possible to activate risk-free sell operations in anticipation of profit-taking operations that may occur at any time. Technically, a bearish reversal for gold requires first moving towards the psychological level of $2000 per ounce. Currently, the next closest resistance levels after the recent gains are $2370, $2385, and $2400 respectively.

    Ready to trade today’s Gold prediction? Here’s a list of some of the best XAU/USD brokers to check out. 

    Mahmoud Abdallah
    About Mahmoud Abdallah
    Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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