Gold Hits New Highs, Bulls Remain in Control Amid Overbought Concerns

Image Credit: Bloomberg

Gold prices (XAU/USD) continue to rise in the Asian session on Wednesday, reaching a fresh all-time high around $2,858. The increase is driven by concerns about the economic impact of US President Donald Trump's trade tariffs, which continue to support demand for the safe-haven metal. Additionally, expectations that the Federal Reserve (Fed) will maintain its easing cycle, fueled by signs of a slowing US labor market, are also boosting flows into gold.

Meanwhile, the US Dollar (USD) remains weak, hovering near a weekly low, which further supports gold prices. However, Trump's decision to delay tariffs on Canada and Mexico adds some positive sentiment to the market, potentially limiting gold's gains as the daily chart shows slightly overbought conditions. Traders may wait for a short-term consolidation or a slight pullback before looking for further upward movement.

Looking at technical indicators, the Relative Strength Index (RSI) on both the hourly and daily charts is showing slightly overbought conditions, suggesting caution for bullish traders. However, the recent breakout above $2,800 suggests that the primary trend for gold remains upward, supporting the potential for further gains in the near term.

If there is any corrective pullback, support is expected around $2,830, followed by $2,800. A deeper decline could find support at the $2,773-2,772 level, which previously acted as resistance. A significant break below this level, however, could trigger some technical selling and lead to further declines.

Paraphrasing text from "FXSTREET" all rights reserved by the original author.