Gold Price Forecast: RSI Falls Below 70 to Indicate Sell Signal

Gold Price Outlook: XAU/USD

The price of gold seems to be reversing ahead of the record high ($2943) as the Relative Strength Index (RSI) falls back from overbought territory.

Gold Price Forecast: RSI Falls Below 70 to Indicate Sell Signal

Recent price action warns of a larger pullback in gold as a bearish engulfing candlestick takes shape, and the move below 70 in the RSI is likely to be accompanied by a larger pullback in bullion like the price action from last year.

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In turn, the price of gold may struggle to retain the advance from the start of the month as the RSI indicates a textbook sell-signal, but the weakness in bullion may turn out to be temporary as it continues to offer an alternative to fiat currencies.

With that said, the price of gold may establish a bullish trend in 2025 as it registers fresh record high prices this month, but the precious metal may face a further pullback if it struggles to defend the weekly low ($2857).

XAU/USD Price Chart – Daily

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

The price of gold carves a bearish engulfing candlestick following the failed attempt to close above $2940 (78.6% Fibonacci extension), and failure to hold above $2850 (61.8% Fibonacci extension) may push bullion back towards $2790 (50% Fibonacci extension).
A breach below the monthly low ($2772) brings $2730 (100% Fibonacci extension) on the radar, but the price of gold may consolidate over the coming days should it defend the weekly low ($2857).
Need a close above $2940 (78.6% Fibonacci extension) to open up $3000 (161.8% Fibonacci extension), with the next area of interest coming in around $3050 (100% Fibonacci extension).

Additional Market Outlooks

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USD/JPY Pulls Back Ahead of Monthly High to Halt Three-Day Rally

AUD/USD Eyes January High Ahead of RBA Rate Decision

EUR/USD Recovers as Chair Powell Remains Willing to Adjust Policy

--- Written by David Song, Senior Strategist

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