Key Takeaways
- Gold rebounded on Thursday after tumbling yesterday, as investors kept a close eye on developments related to tariffs and the economic outlook.
- Gold’s price rallied to a new record high earlier this week before staging a dramatic intraday reversal to form a bearish shooting star candlestick pattern.
- Investors should watch key support levels on gold’s chart around $3,145, $2,955, and $2,790, while also watching a critical overhead area near $3,500.
Gold (XAUUSD) rebounded on Thursday after tumbling yesterday from a record high, as investors kept close tabs on developments related to tariffs and the economic outlook.
The precious metal surged to its all-time high of near $3,500 an ounce earlier in the week as investors abandoned risky assets amid concerns about trade tensions between the U.S. and China and President Trump’s repeated criticisms of Federal Reserve Chair Jerome Powell. Gold backed off its highs after Trump said that tariffs on China would likely be significantly reduced and that he has no intention of firing Powell from his role.
The price of gold has soared 28% since the start of the year, boosted by worries that tariffs could slow economic growth and reignite inflation, sending investors flocking to the safe-have asset that is often seen a hedge against rising prices. Gold was trading around $3,350 late Thursday.
Below, we break down the technicals on XAUUSD’s chart and identify key price levels that investors will likely be tracking.
Indicators Signal Momentum Shift
Gold’s price rallied to a new record high earlier this week before staging a dramatic intraday reversal to form a bearish shooting star candlestick pattern.
The recent downside move coincided with a steep drop in the relative strength index (RSI) below overbought levels, indicating a strong momentum shift.
Zooming out, the commodity has trended sharply higher since mid-December, replicating a basic Elliot Wave pattern with five distinct price swings, which is then typically followed by a corrective phase.
Let’s identify three key support levels on XAUUSD’s chart to monitor and also locate a critical overhead area worth watching.
Key Support Levels to Monitor
Further weakness could see gold’s price initially fall to around $3,145. This area may provide support near the early-April swing high, which finds confluence from the 38.2% Fibonacci retracement level when applying a grid from the last year’s December low to this month’s high.
The next lower area to watch sits at $2,955, just above the 61.8% Fibonacci retracement level. Investors may look for opportunities to buy the yellow metal in this region neat the February peak and April trough.
Bullion bulls’ failure to defend this level could trigger a move down to lower support near $2,790. This area, sitting just above the 78.6% Fibonacci retracement level, may attract buying interest around the notable October 2024 swing high.
Critical Overhead Area Worth Watching
Finally, recovery efforts in gold’s price may see the price make another attempt at the $3,500 area. Tactical traders who have bought recent weakness may see the commodity’s record high set this week as a suitable location to lock in profits.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.