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Gold: Correction in sight after reaching nine-year highs

Gold_correction_nine-year-highs_Forex_FXPIG

Gold (XAU/USD) built on the recent upsurge and refreshed nine-year highs at $1866.90 earlier on Wednesday and is now trading just below the $1860 mark. Nonetheless, rising wedge hurdle and overbought RSI on daily chart signal caution.

Key quotes

“Gold, further, tracked the rally in Silver, which recorded fresh seven-year highs just shy of the 23 level. In the day ahead, the precious metal could see a brief consolidative phase, as the bulls take a breather after the fourth straight day of gains. Moreover, any disappointment in the US housing data and worrisome COVID-19 stats could weigh on the broader market sentiment and propel a dollar comeback. In such a case, gold could risk a correction before it resumes its uptrend towards the record high of $1920.”

“The daily chart of gold signals caution, as the price nears the four-month-long rising wedge resistance at $1869. Meanwhile, the daily Relative Strength Index (RSI) has entered the overbought territory for the first time since end-February, which could ring an alarm to the buyers. Therefore, the bright metal risks a corrective move lower from a technical perspective while investors may resort to profit-taking after the robust rise.”

“The price could reverse towards last week’s strong resistance zone around $1818-20 level in the near-term should it fail to resist above the intraday low of $1840.66.The next support awaits at $1803.87, which is the critical rising wedge support. A break below the latter will validate the formation and call for a reversal in the ongoing bullish trend.”

“However, if the gold buyers defy the warnings then $1880 could be put to test following a break above the rising wedge hurdle.”

Source: fxstreet

Gold (XAU/USD) built on the recent upsurge and refreshed nine-year highs at $1866.90 earlier on Wednesday and is now trading just below the $1860 mark. Nonetheless, rising wedge hurdle and overbought RSI on daily chart signal caution.

Key quotes

“Gold, further, tracked the rally in Silver, which recorded fresh seven-year highs just shy of the 23 level. In the day ahead, the precious metal could see a brief consolidative phase, as the bulls take a breather after the fourth straight day of gains. Moreover, any disappointment in the US housing data and worrisome COVID-19 stats could weigh on the broader market sentiment and propel a dollar comeback. In such a case, gold could risk a correction before it resumes its uptrend towards the record high of $1920.”

“The daily chart of gold signals caution, as the price nears the four-month-long rising wedge resistance at $1869. Meanwhile, the daily Relative Strength Index (RSI) has entered the overbought territory for the first time since end-February, which could ring an alarm to the buyers. Therefore, the bright metal risks a corrective move lower from a technical perspective while investors may resort to profit-taking after the robust rise.”

“The price could reverse towards last week’s strong resistance zone around $1818-20 level in the near-term should it fail to resist above the intraday low of $1840.66.The next support awaits at $1803.87, which is the critical rising wedge support. A break below the latter will validate the formation and call for a reversal in the ongoing bullish trend.”

“However, if the gold buyers defy the warnings then $1880 could be put to test following a break above the rising wedge hurdle.”

Source: fxstreet

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