【Gold】Adjusting from the peak — But the phase of another rise is coming

Gold is currently around $4,509.

After a sharp retracement from the high near $5,400, it has fallen to around $4,500. The latest monthly candle is a long upper shadow with a bearish body. It appears selling is entering from the high price area.

“Has Gold's upward trend ended?”

To be concise. It has not ended. This is just a pullback.

Monthly RSI above 90 → a pullback is “to be expected”

Some people are calling this drop a “crash,” but at the monthly level, it is a natural pullback.

The monthly RSI had exceeded 90. An RSI above 90 indicates “extremely overbought.” Historically, there has almost always been a pullback after RSI exceeds 90.

Moreover, the drop from $5,400 to $4,500 (about 17%) is relatively mild as a pullback after RSI exceeded 90.

This is not a panic level. Technically, it is merely a pullback that was bound to come.

What the monthly chart is showing

Please view the monthly chart calmly.

From the $960s to $5,400, it rose over about 15 years. It has gone through several large adjustments, but the long-term trend remains upward.

This pullback is just another move within that long upward trend.

What to watch further is that the area around $4,500 sits right where the monthly 13-period SMA is located. When the long-term trend is healthy, touching the moving average and rebounding is a natural movement.

If it rebounds here, the phase of testing the $5,000s again and even the all-time highs may begin.

The phase of re-acceleration is near

In my view, the phase of re-acceleration is approaching.

There are three reasons.

① RSI has entered the pullback zone

The monthly RSI has fallen from above 90. The overheated condition is being resolved. If the RSI cools to around 60–70, room for further gains will reopen.

② Approaching the monthly MA

Prices are nearing the monthly moving average. In a long-term uptrend, touching the MA is an excellent point to buy on dips. Looking at history, a pattern of rebounding off the monthly MA and making new highs repeats.

③ Fundamentals have not changed

Central banks around the world continue to buy gold. Geopolitical risks have not disappeared. Inflation concerns remain. The reasons to buy gold have not changed.

Once the pullback ends, these bullish factors will regain their effect.

Be careful, short sellers

To those shorting at this level, I say this.

Be careful.

From $5,400 to $4,500 is a $900 drop. It’s natural to think it can go lower. But a monthly-level pullback can end at any time.

Gold reversals happen quickly. It’s not just when going down; when it goes up, it can be even faster. A rebound from $4,500 to $5,000 could occur within a few days.

People with short positions should be mindful of the following.

・The uptrend continues unless and until the monthly MA is decisively broken
・Be prepared to exit immediately if a reversal signal appears
・Wanting “it will go a little lower” is the most dangerous
・Always set a stop loss. Gold reversals can be instantaneous

Future strategy

① Short-term short positions are fine, but don’t chase.

Short around $4,700–$4,800. But keep profit targets modest. Unless it falls below $4,400, don’t overextend.

② Prepare for buying on dips

If there is a rebound off the monthly MA, be ready to switch to long. From here, dip buying could aim for $5,000–$5,500 in the medium to long term.

③ If it clearly breaks $4,300, change the scenario

If it decisively breaks $4,300 on the monthly chart, the pullback could deepen more than expected. In that case, continue shorting. But the probability of that happening is low.

Summary

・Gold is in a pullback from a peak of $5,400 to $4,500
・A pullback after RSI above 90 on the monthly chart is natural. There is no need for panic
・Approaching the monthly MA. If it rebounds here, a re-acceleration phase begins ・Fundamentals have not changed. The reasons to buy remain ・Short sellers, be careful. Reversals can come in an instant ・Prepare for buying on dips

A pullback within the long-term uptrend. When this ends, gold will again test the all-time highs.

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