Gold at $4,500: Macro factors favour $4,600-$4,700, pullback likely?

Gold refreshes New All Time High at $4500.
Dollar Index plunges below 98.
Expectations rise for interest rate cuts by Federal Reserve.
Geo political tensions mounting, fuelling strong safe haven demand.

Sunil Kumar Dixit SK Charting

4 Hour Gol Technical Chart by www.skcharting.com

Market structure

1 Hour and 4 Hour structure is strong and bullish with price printing Higher High and Higher Low sequence with no significant correctional retracement.

Prices maintaining stability above 5 EMA which carries the immediate bullish momentum.

Impulsive bullish move is being followed by shallow consolidation and no deep correctional pullback.

There is no structural breakdown in price pattern indicating that Gold remains a Buy the Dip.

Fundamental drivers

Growing expectations of interest rate cuts by Fed

Dollar Index plunging below 98

Geo political tensions fuelling safe haven demand.

Increased Gold purchases by Central Banks despite high prices.

Macro triggers firmly support bullish targets for $4600-$4700

Technical drivers

RSI readings overbought but no bearish divergence seen, means potential exists for continued buying.

Prices respecting 5 EEMA, running closely to prices, affirming bullish strength.

Current sideways price behaviour shows consolidation before next bullish leg.

What's current and next scenario?

Set of macro factors drive strong rally in Gold prices reaching thresholds of psychological zone $4500 even as the RSI indicator reading shows overbought conditions. The decisive breakout above prolonged consolidation above previous All Time High of $4380 triggered a robust demand which took no time smashing through $4400-$4450 and before many could manage to cover shorts, Gold jumped at $4500

Currently consolidating above $4468 and below $4498, the immediate resistance sits at 1st Fibonacci expansion $4516 while next expansion would be $4586

Meanwhile, if $4468 breaks, there is a cluster of support levels $4463-$4458-$4453-$4443-$4433 and buyers are likely to react to the price levels.

If this support zone fails to decisively convince buyers and results only in a measured response, further selling pressure may extend downward correction towards $4400-$4350

Though immediate trend is very bullish and momentum is strong, small time frames are over heated and a correctional retracement towards support zone is a high probability before embarking on fresh rally to higher price discovery beyond $4500 that mid term estimates for $4600-$4700 over an extended period of time.

Note: Bullish momentum remains intact supported by price stability above 4 hourly 5 EMA aligned with local demand zone and immediate support $4470 which is the 1st line of defence.

Author

Sunil Kumar Dixit

SK Charting

Sunil Kumar Dixit is Chief Technical Strategist and founder of SK Charting, a research firm based in India. He tracks Precious Metals, Energy, Indices and Currency Pairs. He also participates as an expert panellist on Channel Television, Nigeria.

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