Gold Rally Poised for a Pause? Eyes on a Critical 2650 SupportThe XAU/USD pair has begun to lose some steam after recently marking new local highs. Currently, the price is flirting with the critical 2650 level, now acting as a pivotal support. The market appears to be entering a phase of heightened uncertainty, often referred to as the "panic zone," where traders may seek to lock in profits ahead of Federal Reserve Chair Jerome Powell's much-anticipated speech.
From a technical perspective, while the overarching trend remains bullish, the momentum that drove the price to its all-time high (ATH) of 2685 seems to have stalled. The market now hesitates, seemingly unwilling to test or break new highs in the immediate future. Much of the earlier bullishness was fueled by expectations surrounding interest rate cuts, but with that catalyst largely absorbed, traders are now turning their attention to upcoming macroeconomic data. Key among these is the Chicago PMI and, more significantly, Powell’s address at 17:55, which could set the tone for the near-term market direction.
However, it's important not to overlook the geopolitical situation in the Middle East, which continues to inject an element of unpredictability into the market. These external factors, combined with technical considerations, suggest that a deeper retracement could be on the horizon.
The technical setup indicates signs of overextension, and given the current market conditions, a correction may be imminent. It is plausible that gold could revisit key support levels in the 2634-2623-2613 range, where buyers might regroup before the next leg of the recovery. The broader price action suggests we may see a consolidation phase before any renewed upward momentum.
Resistance zones to watch are at 2660 and 2675, while the key support zones rest at 2634 and 2623. A possible retest of these support areas could offer traders clarity on the market’s next move. A confirmation of range boundaries between 2615 and 2685 may lead to a more extended consolidation period, with the potential for a flat pattern forming between 2600 and 2685.
In summary, while the technical outlook remains largely positive in the long term, the market appears primed for a short-term correction. Traders should keep an eye on how the 2634-2613 support region holds up in the face of any selling pressure, as well as the market’s reaction to Powell's speech. The recovery may depend on how the range boundaries are confirmed and the subsequent reaction to key economic and geopolitical developments.
Traders, if you found this idea helpful or have your own insights to share, feel free to drop a comment. I’d love to hear your thoughts!
