Gold - resilient, and 'overbought'

There are two words repeatedly used to describe gold’s performance during the past fortnight: ‘Overbought’ and ‘resilient’. At the end of January, gold finally took out its all-time high from October. It had rallied steadily since mid-December without any significant pullback. This was an impressive, and stealthy, rally which saw a gentle rise in the daily MACD as upside momentum continued to build. That helped gold hit a fresh all-time intra-day high over $2,940 on Tuesday. Prices subsequently pulled back a touch. But whereas such a pullback was typically the precursor to a deeper sell-off throughout most of 2024, this time round it turned out to be a buying opportunity. This was starkly apparent yesterday when gold, and to a lesser extent silver, dropped following the hotter-than-expected CPI update. Buyers quickly rushed in to take advantage of lower prices, pushing gold up from the $2,860 area, back above $2,900. So, the bull run continues, and gold’s resilience shines through. But it remains overbought, so bulls should stay on their toes.


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