**Gold Pullback and Continuation: Market Analysis**
*By FBS | Adapted from original analysis by Ken FXStreet*
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Gold continues to be one of the most closely watched assets in the financial markets. The yellow metal’s price action not only signals investor sentiment during uncertain times but also provides insight into global macroeconomic conditions. Recent price behavior has spurred discussions about a possible pullback and the potential for bullish continuation, making it a timely subject for traders and investors. The original analysis by Ken on FXStreet provides a comprehensive evaluation of gold’s technical position, the ongoing pullback, and the scenarios that may unfold. This article expands on those insights, offering a deeper exploration of the key factors at play and strategies for navigating the current landscape.
### Market Overview
Gold’s trajectory over the past year has been shaped by a complex tapestry of influences:
– **Monetary Policy:** The US Federal Reserve’s policy tightening cycle has played a major role in influencing gold prices, especially as higher yields and a stronger dollar typically weigh on the asset.
– **Geopolitical Uncertainty:** Ongoing conflicts and rising tensions in key regions have bolstered gold’s appeal as a safe-haven asset.
– **Inflation Dynamics:** Persistent inflation across many economies has encouraged more investors to hedge using gold, given its traditional status as a store of value.
– **Technical Drivers:** Price action, key support and resistance levels, and sentiment indicators continue to shape short- and medium-term moves in the market.
With these overarching factors in mind, let’s dive into the latest technical and fundamental perspectives on gold as of June 2024.
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### Technical Analysis: Pullback Context
The technical picture for gold, as outlined by Ken in his recent FXStreet video, shows the market at a pivotal crossroads. After an extended rally that saw gold push to new highs, a well-defined pullback has emerged. The key points from the technical analysis are:
– **Price Structure:** Gold remains in a long-term uptrend, but the latest retracement exposes market vulnerability and tests investor conviction.
– **Support Levels:** The market is currently testing major support zones, particularly around the $2,300 and $2,280 levels. Sustained holding here is critical for renewed bullish momentum.
– **Resistance Levels:** On the upside, immediate resistance sits near $2,350, with another key barrier at the recent high around the $2,400 mark.
– **Trendlines:** The broader bullish trendline from previous months is still intact, suggesting that the pullback may be part of a healthy consolidation.
– **Momentum Indicators:** Oscillators such as RSI have retreated from overbought territory, providing a potential setup for a bullish continuation if sellers begin to lose steam.
#### Key Technical Points
– Gold has completed a five-wave rally from its recent low to peak above $2,400, marking a strong bullish impulse.
– Following the peak, corrective price action has guided gold lower, but the selloff has halted at a significant swing level.
– The daily chart’s moving averages (21-EMA and 50-EMA) converge around $2,300, offering dynamic support.
– Volume profiles show declining participation on the pullback, hinting at exhaustion among sellers.
– The psychological threshold of $2,300 remains a critical level; a daily or weekly close below it would signal deeper correction potential.
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### Fundamental Drivers
Several fundamental elements continue to steer gold’s medium-term prospects:
#### Interest Rates and Central Banks
– **Fed Policy:** Expectations for future rate hikes or cuts are central to gold’s valuation. While recent FOMC meetings have indicated a pause in tightening, persistent inflation could delay rate cuts, supporting the dollar and pressuring gold.
– **Yield Curve:** US Treasury yields, especially the 10-year, have an inverse correlation with gold. Rising yields tend to sap demand for non-yielding assets like gold, but geopolitical shocks or risk av
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