Gold has experienced a significant pullback this week, dropping to $2300 per troy ounce. The decline since Friday has been over 3.7%, with the trigger being a less severe escalation in the Palestinian-Israeli conflict than initially anticipated.
Despite the recent pullback, many analysts view this as a much-needed technical correction. There is a possibility that this correction could develop into a bear market, especially considering the price broke the $2400 mark for the second time in history last Friday.
Traders have been actively selling gold and silver intraday this week, regardless of stock market or currency fluctuations. This shift in focus suggests a specific trend in the market, leading to a more significant shakeout.
The current decline in gold price has surpassed the 76.4% intermediate retracement level, indicating a more global market adjustment. The RSI has also retreated from the overbought area, pointing towards an active downward movement. The divergence between the RSI indicator and the price was a crucial sign of the impending decline.
Despite the recent downward movement, the positive scenario for gold remains valid as long as the price stays above $2360, where the 61.8% Fibonacci retracement level is situated. There is still a possibility for gold to reverse its trend and move back up.
If gold continues to sell-off over the next few days, it could drop to $2360, which would be a crucial level to watch for as an indicator of a true reversal. A breach below $2185-2200 within a short period could signal a long-term trend reversal with a possible downside target of $1900 by the end of the year.
The recent gold price movements indicate a significant shift in market sentiment and technical indicators. Traders and analysts are closely monitoring key price levels to determine the future trend of gold. While the current pullback may indicate a bearish market, there is still a possibility for a reversal if certain price levels hold.
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