Gold prices gained significant buying traction on Tuesday – the largest 4-hour increase of the year –, with the price peaking at a fresh one-month high near 1,717. The positive slope in the RSI and the growing MACD are endorsing the current bullish momentum in the price, though with the former above its 70 overbought level, the bears could be around the corner.
A decisive close above the aforementioned new high could reduce negative risks, producing another bullish extension towards the key area of 1,725-1,730. Beyond that, traders will target the high from August at 1,745.
Otherwise, if sellers take the lead, the pair may pull back to test the nearby support of 1,700. Falling lower, the 1,683 inside swing high may attempt to add some footing ahead of the 1,675 barrier. Slightly lower, the 20-period simple moving average (SMA) at 1,669 and the 200-period SMA at 1,660 could block the way lower.
In brief, the yellow metal is strengthening its bullish trend in the short-term picture, but some caution is warranted as the technical oscillators are holding in the overbought territories.
