Gold Breaks Records: Will the Rally Ignore RSI Warnings?

Gold Soars to Record Highs, Is $3500 Next?

Gold prices are hitting new all-time highs, shrugging off warnings from technical indicators that say the market is overbought. As investors look for safety in uncertain times, gold’s bullish momentum seems unstoppable and according to analysts, we may be heading toward the $3500 mark sooner than expected.

Let’s dive into the signals, resistance levels, and global factors that are driving this relentless surge in XAU/USD.

What’s Fueling the Gold Rally?

At the start of this week, gold opened near $3326 per ounce, a level that confirms the strength of the uptrend after smashing past the $3300 resistance zone. On Monday, the yellow metal soared to a new all-time high of $3357 per ounce, marking its highest level ever in global gold trading history.

Key Drivers of This Surge:

• Safe-Haven Demand: Ongoing economic uncertainty and financial market volatility have made gold an attractive hedge.
• U.S. Tariff Escalations: President Trump’s intensifying trade war with major economies like China has heightened recession fears.
• Central Bank Dovishness: Expectations that central banks may keep or lower interest rates in response to weaker global growth have added to gold’s appeal.

These conditions have ignited a rush to gold bullion, much like what was seen during past periods of financial instability.

Technical Overview: Overbought, But Still Rising

Despite being heavily overbought on multiple indicators like RSI, MACD, and Stochastic, gold remains on a steep upward trajectory.

Key Technical Levels:

• Support zones: $3280, $3220, and $3160
• Resistance zones: $3368, $3389, and $3440

Most analysts agree that while gold is technically overbought, this may not slow its rise just yet. The current strength suggests we could be headed towards testing $3400 and possibly $3550 in the near future.

Today's Trading Signals

For those looking to take positions, here are some tactical entries and exits based on current price action:

• Sell Setup: Short at $3368 with a target of $3200. Stop loss at $3400.
• Buy Setup: Long at $3265 aiming for $3370. Stop loss at $3200.

These setups are for traders who thrive in volatility. But as always, caution is key.

Why Traders Are Buying Every Dip

The trend of "buying the dip" in gold continues, and for good reason. According to Kitco, analysts see the current rally not as a fluke, but as a sustainable climb supported by macroeconomic fundamentals.

Even though some consolidation may happen around key resistance zones, the long-term trajectory remains bullish. Gold’s appeal as a hedge against inflation, rate cuts, and global instability means that dips are seen as golden entry points (literally).

Fed, Tariffs, and Inflation, A Toxic Mix?

The U.S. Federal Reserve is also in the spotlight. Jerome Powell recently criticized the inflationary pressure caused by Trump’s tariffs, saying it could derail growth and raise consumer costs. That comment alone sparked further gold buying, as it pointed to continued uncertainty in policy direction.

Meanwhile, the U.S. Dollar Index (DXY) continues to slide amid doubts over the Fed’s independence, another factor propping up gold prices. A weaker dollar typically translates into higher gold prices, making the case for a sustained rally even stronger【source: Reuters】.

Can Gold Really Hit $3500?

Short answer: Yes, if the current market conditions persist.

Long answer: Gold has already hit $3357, and most forecasts suggest that $3400 to $3500 is a reachable target within weeks   especially if:

• Trade talks between the U.S. and China remain in limbo,
• The Federal Reserve delays rate cuts,
• Or global economic growth slows further.

Many traders are even preparing for a scenario where gold becomes the ultimate inflation hedge, pushing beyond $3500 in Q2 2025.

In-Depth: What Could Stop This Rally?

Even strong trends face speed bumps. Some possible headwinds include:

• A breakthrough trade agreement between the U.S. and China
• Sudden hawkish signals from the Federal Reserve
• Profit-taking at overbought levels

Still, most experts believe that unless these shifts occur soon and decisively, gold’s trendline will remain pointed upward.

Final Thoughts

Gold is in beast mode   and the market isn’t slowing down anytime soon. While overbought signals usually suggest caution, this time, macroeconomic chaos is overriding technical warnings. Whether you're a long-term holder or a short-term trader, the message is clear: gold is hot, and it may just be getting started.

But always manage your risk, don’t throw your strategy out the window just because gold looks invincible.

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