Gold had a near-perfect macro backdrop to extend higher last week, with Dollar weakness intensifying ahead of the Islamabad talks between the US and Iran. Yet, the rally has struggled to gain traction toward the $5,000 psychological level. The failure to capitalize on favorable fundamentals is beginning to raise questions about whether the current move is running out of momentum.
The loss of upside momentum is becoming apparent. Bearish divergence condition in 4H MACD is showing clear signs of fading strength. The rebound from 4,098.45 is more consistent with a distribution phase than a renewed accumulation cycle. In other words, rather than fresh buying driving prices higher, the market may be seeing gradual profit-taking into strength.
At the same time, Gold is not collapsing. The early-week gap lower today, triggered by the lack of progress in US-Iran negotiations, was quickly reversed as Dollar strength faded. This resilience indicates that there is still underlying demand supporting prices, preventing a sharper reversal.
However, this support may prove insufficient to push prices significantly higher. The $5,000 psychological level represents a major barrier, both technically and behaviorally. It is likely to attract selling interest from institutional players looking to lock in gains from lower levels.
Technically, further gains are still possible as long as 4,554.02 minor support holds. The rebound from 4,098.45 could extend through 4,855.12. However, key resistance lies at 61.8% retracement of 5,598.38 to 4,098.45 at 5,025.40. This zone sits just above the 5,000 handle and reinforces the idea of a heavy ceiling. Without a strong catalyst, the probability of sustained gains beyond this region appears limited.
On the downside, a break below 4,554.01 minor support would be an early signal that the rebound has completed. Such a move would shift focus back toward the 4,098.45 low, with scope for an extension toward 4,000 psychological level.
Taken together, while residual demand may support prices in the short term, fading momentum and strong resistance near 5,000 increase the risk that the rally is topping out. Unless a new catalyst emerges to accelerate Dollar weakness, the balance of risks is gradually tilting toward a rejection scenario rather than a sustained breakout.
