Gold and silver were both higher in early trade this morning. This time last week gold posted a new all-time closing high above $2,950. It had made steady upside progress since the beginning of this year, but the rally took the price into a very overbought area as measured by the daily MACD.
Last week’s subsequent sell-off saw gold trade towards $2,830 on Friday for a drop of $120 from the highs, or 4%. That is a relatively modest pullback, but it has certainly taken gold down from being significantly overbought.
This has raised the possibility that gold could now resume the rally which can trace its origins back to lows from December 2015. But the daily MACD is pointing sharply downwards and has not yet hit the neutral area, let alone fallen to oversold levels. That suggests that it may have further to fall.
Source: TN Trader
However, if gold were to consolidate for a week or so, this could also help to reset the MACD at levels from which gold could rally. Of course, it’s also possible that gold has already topped out, and that the key $3,000 per ounce target will have to wait for another year.
