Facts:
- Uncertainty regarding the trade war and peace in Ukraine has led to record increases in gold.
- Demand for gold has already been at a high level since the beginning of the fourth quarter of 2024. With such a long upward trend, there is room for at least a short-term correction in the gold market.
- The recent strong pullback in the stock market caused a pullback in gold due to the search for liquidity. The continuation of the correction may further extend the selling pressure in the gold market as well.
Recommendation:
Short position at the market price
- TP: 2830
- SL: 2970
Recommendation:
Gold remains at historically high levels, driven by record demand since the fourth quarter of 2024. This demand is supported by geopolitical concerns and the search for “safe havens.” The recent pullback in stock markets, rising bullion inventories on the COMEX, as well as the need for the US to roll over a large portion of its public debt, may limit short-term demand for gold. A lower high at the 2930 USD level (compared to the historical high of 2950 USD) further confirms the emergence of selling pressure – the key support level is the recent lows around 2830 USD.
The prospect of continued declines is supported by the fact that some capital may flow into bonds as debt is rolled over. The long-term upward movement in the metal creates conditions for a correction – and although gold remains fundamentally attractive, the momentum of the recent gains and technical signals suggest considering a short position with a potential target around 2830 USD.
Source: xStation 5
Methodology and adopted assumptions:
The recommendation was based on the fundamental analysis of the gold market, its correlation with other financial markets, and technical chart analysis. The target levels were determined using classic support and resistance levels as well as Price Action analysis.
