Gold Price Forecast: RSI Falls Back from Overbought Zone

Gold Price Outlook: XAU/USD

The price of gold increased for the seventh consecutive week even as a bearish outside day emerged on a daily timeframe, but bullion may consolidate over the remainder of the month as the Relative Strength Index (RSI) falls back from overbought territory.

Gold Price Forecast: RSI Falls Back from Overbought Zone

The price of gold appears to be stuck in a narrow range after registering a fresh record high ($2759), and the RSI may show the bullish momentum abating should the oscillator continue to hold below 70.

Nevertheless, bullion may continue to serve as an alternative to fiat currencies amid the threat of a policy error by major central banks, and the price of gold may reestablish the bullish trend from earlier this year as it still tracks the positive slope in the 50-Day SMA ($2599).

With that said, the range bound price action in gold may end up short lived as it continues to hold above the moving average, but month-end flows may also influence the precious metal amid the uncertainty surrounding the upcoming elections in the US.

XAU/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; XAU/USD on TradingView

• The price of gold consolidates following the failed attempt to push above $2760 (38.2% Fibonacci extension), and bullion may continue to track sideways should it hold above the weekly low ($2709).
• Need a close above $2760 (38.2% Fibonacci extension) to open up $2810 (50% Fibonacci extension), with the next area of interest coming in around $2860 (61.8% Fibonacci extension).
• At the same, failure to hold above the $2700 (23.6% Fibonacci extension) to $2730 (100% Fibonacci extension) region may push the price of gold back towards $2630 (78.6% Fibonacci extension), with the next area of interest coming in around the monthly low ($2603).

Additional Market Outlooks

Monetary vs Fiscal Policy: Implications for FX Markets

Euro Forecast: EUR/USD Recovery Pulls RSI Out of Oversold Zone

USD/CAD Defends Post-BoC Reaction to Eye August High

GBP/USD Vulnerable as Bearish Price Series Persists

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong