The recent geopolitical tensions was a good reason for stocks to come off the boil. And now that the fears are abating, it is also providing a good reason for gold to also let out some of the steam. Gold made some attempts to top $2,400 earlier this month but failed to see a daily close above the key level. And now, price is starting to feel exhausted as it falls back to $2,300 on the day.
It has been quite the run for gold over the last two months, having gained by more than 20% at one point. One can easily make an argument of price running up too high, too fast. And with that, comes the correction/retracement phase. That might be where we are at now.
The near-term chart already took a turn in trading yesterday here. And the further drop today now calls into question the bigger picture from a technical perspective. The daily chart highlights that we might see this latest fall extend further, with little support on the way down.
The Fib retracement outline shows that we could see a push towards $2,260 next at least before some semblance of support. That coming from the 38.2 Fib retracement level. The next key stop after that might be a push towards $2,200.
But as mentioned yesterday, there is still a very strong argument for gold to run even higher in the months ahead. As such, this latest retreat is another dip buying opportunity. Stay vigilant on changes in market sentiment and also lean on the technicals. That's the best bet when going about trades like this one.
