The gold market has witnessed an explosive surge during Monday’s trading session, fuelled by persistent anxieties surrounding the US dollar and the ongoing economic implications of Donald Trump’s policies. The unresolved tariff situation continues to cast a shadow over the dollar’s strength, making it challenging to envision a scenario where traders aggressively buy into the currency – a move that would typically be necessary to reverse gold’s upward trajectory.
While the current rally has propelled gold into overbought territory, attempting to short the precious metal appears to be a risky proposition at this juncture. The underlying demand for gold seems overwhelmingly strong, making any attempt to bet against the trend potentially perilous.
A significant pullback towards the $3,200 level could present an attractive entry point for buyers looking to capitalise on discounted gold prices. However, the current momentum suggests a market firmly entrenched in a one-way trade, a situation that is rapidly becoming extreme. It’s crucial to remember that such runaway trends can often persist for longer than initially anticipated.
Resisting this powerful bullish momentum would be ill-advised. While the prospect of buying gold at a lower price during a pullback is appealing, the current market dynamics, as evidenced by the strong upward momentum of the price candle, point towards a continued ascent. The $3,500 mark now appears to be a likely target, and at the current pace, this level could even be reached by the close of today’s trading.
In conclusion, the technical analysis of the gold market reveals a powerful and sustained upward trend driven by US dollar weakness and concerns surrounding trade policies. While the market is currently overbought, the strong underlying demand suggests that attempting to short gold would be a contrarian and potentially unprofitable strategy. Instead, traders should monitor for potential pullbacks towards the $3,200 level as opportunities to join the bullish trend. The immediate target appears to be the $3,500 mark, which could be attained swiftly given the current momentum. Riding this bullish wave, while remaining mindful of potential overextension, seems to be the most prudent approach in the current market environment.
Disclaimer: Please note that the content provided herein is intended solely for the purpose of broadening general understanding and offering general information regarding technical analysis of the gold market as observed on a specific trading day. It should not be construed as financial advice. Trading in gold and other commodities involves significant risk and is not suitable for all investors. 1. Past performance is not indicative of future results. 2. You are strongly encouraged to seek guidance from qualified financial advisors tailored to your specific circumstances and risk tolerance before making any investment decisions. By engaging with this material, you acknowledge and agree to the terms of this disclaimer.
