Gold Retreats from Peak, Market Begins to Take Profits
Gold prices experienced their strongest pressure since October after traders rushed to take profits following a sharp rally that briefly took the precious metal above $5,500 per ounce. The selling wave emerged amidst the "flight from bonds and currencies" narrative that had previously fueled gold's rally in recent weeks.
The trigger for the correction came as the US dollar began to recover, making dollar-priced gold less attractive to some global buyers. As a result, gold prices briefly fell as much as 5.7%—the largest intraday drop since October 21—before paring some losses. Silver also suffered further, falling as much as 8.4%, confirming that the precious metals market was entering a "cooling" phase after a particularly strong run.
Fundamentally, gold has risen aggressively throughout the year due to a combination of geopolitical tensions, concerns about the Fed's independence, and a strengthening narrative of currency depreciation. In just this month, gold has surged nearly 20%—a figure that makes the market vulnerable to corrections due to the large number of pending profitable positions.
From a technical perspective, the "overheating" signals are clear. Gold's RSI briefly broke through 90, while silver's RSI hovered around 84. Generally, an RSI above 70 indicates an asset is overbought, so it's natural for the market to need a pause, consolidation, or correction.
"It appears the momentum is starting to slow, and traders are taking some profits at the peak," said Bart Melek, global head of commodity strategy at TD Securities. This means this correction is more of a cooling-off after an extreme rally, not a sign that the big story in gold is over. (alg)
Source: Newsmaker: id
