Gold price forms double top as hawkish Fed and risk-on sentiment cap rally
Gold struggles to reclaim $2,900 after sharp pullback from all-time high of $2,943 per ounce.
Gold prices remain at a critical juncture, struggling to regain the $2,900 level after a sharp pullback from all-time highs.
Last week, gold made a double top near $2,943 per ounce before declining due to overbought conditions. The drop saw prices break below the psychological support at $2,900, reaching as low as $2,875, forming a bearish engulfing candlestick pattern that now acts as a technical barrier to further gains.
The recent decline has caused the RSI on the daily chart to reverse from overbought territory, indicating fading bullish momentum. In today’s Asian session, gold attempted to recover, rising 0.9% to $2,906 before pulling back. During the European session, prices are once again challenging the $2,900 resistance level, a key area to watch.
Gold price dynamics (November 2024-February 2025). Source: TradingView.
Market sentiment and Fed policy weigh on gold’s next move above $2,900
Expectations that the Federal Reserve will maintain its hawkish stance and keep interest rates elevated are preventing a deeper decline in the dollar, limiting gold’s upside potential.Meanwhile, optimism surrounding talks between the U.S. and Russia over the Ukraine conflict and a generally positive risk tone in financial markets have also capped gold’s gains. However, the near-term bias still leans bullish, provided that gold can hold above the critical resistance levels.
If gold fails to sustain a break above $2,900, the bearish engulfing pattern could push prices lower, potentially below the previous day's lows. However, a decisive move above $2,900 could open the door for another test of the all-time high near $2,943. Traders should monitor these levels closely for potential directional cues.
Gold price has maintained its bullish trajectory despite the daily RSI indicating oversold conditions. The yellow metal holds above $2,900 as traders weigh inflation risks and Fed policy.
