Gold price analysis: Turns lower from $1,730
|- Gold's hourly chart is reporting a bearish divergence of the RSI.
- A minor pullback may be seen before an extension of the recent rally.
Gold has pulled back from the seven-year high of $1,730 and could witness a deeper pullback to the former hurdle-turned-support of $1,703, as the hourly chart is reporting a bearish divergence of the relative strength index.
A bearish divergence occurs when the indicator charts lower highs, contradicting higher highs on price and is widely considered an early indicator of bearish reversal.
However, in this case, the bearish divergence has occurred on the hourly chart and indicates temporary bull fatigue.
As a result, prices may pullback to $1,703 before posting stronger gains above $1,730. The yellow metal charted a big bullish candle on Monday and closed above $1,703 (March 9 high, previous seven-year high), reinforcing the bullish view and opening the doors for a continuation of the "V-shaped" rally from the March 20 low of $1,445.
Hourly chart
Trend: Pullback likely
Technical levels
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