Gold hit a high of $2431 last week and fell to $2361 to catch its breath. Technical analysis suggests that gold has seen its recent peak and is showing signs of weakness. The market warns that if the geopolitical situation suddenly degrades, a pullback will attract buyers to leave and wait.

Goldman Sachs gold analyst Liu Hao said that considering the escalation of geopolitical tensions in the Middle East, it is big, ugly, and unusual.

He explained, "You can see why traders are questioning whether the significant reversal in hardware prices last week may indicate that we have seen a recent peak after a happy start to 2024

Although the price trend has indeed peaked, with prices soaring to new record highs earlier in the session and then falling sharply at the close, it may be too early to cancel the rebound now.

As detailed in last week's report on gold and silver, there are many factors that can explain the hot start of precious metals this year, and geopolitical tensions are just one of them to consider. Although the news over the weekend may be worse, assuming this is the end of hostilities in the region is a big call.

As shown in the figure below, the gold price has been on an upward trend since late March, and the price continues to attract buying at dips around these levels. Although the upward trend of RSI has been broken, indicating that the upward momentum is weakening, it is currently difficult to be overly bearish on gold prices until we see prices eventually break through the upward trend.

If the price remains above the trend line, traders can take advantage of the opportunity of falling to that level to establish long positions and allow stop losses to be set below for protection, with the goal of pushing the price back to the previous record high of $2431.50.

If the trend line gives way, given Friday's price trend and weakened bullish momentum, this is a clear and increasing risk that the trades above may reverse, allowing traders to stop and sell above the trend line before breaking through to seek protection.

The small resistance is located at $2305.75 and $2265.75, considering horizontal support, mid February upward support, and near the 50 day moving average, the more obvious support area is below $2200, "Liu Hao analyzed.

He finally mentioned, "If there is a downward breakthrough, it should not be interpreted as a pullback. In the absence of a significant increase in the outlook for US interest rates or a sudden downgrade in the geopolitical situation, a pullback may attract buyers to leave and wait

(Liu Hao, Gold Analyst at Goldman Sachs Group, Special Advisor at Bosheng Planning)