Gold prices have shattered previous records, trading around $4,425 per ounce as the precious metal caps off what is shaping up to be its strongest annual performance since 1979.
But now the burning question is:
Will gold push even higher toward $4,500 in the coming sessions, or are profit-takers about to trigger a sharp pullback?
Gold’s price action on the 4-hour timeframe reveals a textbook bullish breakout that has a lot of market participants buzzing about further upside potential.
Trend and Structure
The chart shows gold firmly entrenched in a well-defined uptrend that began in late October.
Price is trading significantly above both key moving averages, with the 50-period SMA at $4,307.87 and the 200-period SMA at $4,175.21.
The bullish arrangement of these indicators, with the shorter-term average well ABOVE the longer-term one, confirms a strong medium-to-long-term bullish trend.
Most notably, gold has recently broken out above a parallel ascending channel that had contained price action for the past two months.
This breakout above the $4,350-$4,370 resistance zone signals an acceleration of the existing uptrend and opens the door for a move toward the psychologically significant $4,500 level.
Recent candles near the channel top are relatively long-bodied bullish bars, showing aggressive buying.
But here’s the thing: this type of vertical push after a steady grind often precedes either a sideways flag or a snapback toward the 50‑SMA / mid‑channel.
The pattern of higher highs and higher lows remains intact throughout the chart, with each pullback met by renewed buying interest at progressively higher levels.
The October-November correction found support near the $4,000 mark and the lower channel boundary, setting the stage for the current rally phase.
Our MarketMilk’s Trend Following Rating for gold clearly shows Bullish.
Momentum and Overbought Conditions
The Relative Strength Index (RSI) currently reads 72, indicating overbought conditions but not yet at extreme levels.
While readings above 70 traditionally suggest caution, the RSI has maintained a pattern of oscillating between 30 and 75 throughout this rally, with brief spikes above that range.
The current reading shows strong momentum but leaves some room for further upside before hitting truly stretched territory above 80.
Key Support and Resistance Levels
Resistance level to watch:
- Immediate resistance: $4,427-$4,430 (recent high)
- Major psychological level: $4,500
- Extended target: $4,550-$4,600 based on channel projection
Critical support levels:
- First line of defense: $4,350-$4,370 (broken channel resistance, now support)
- Dynamic support: $4,307 (50 SMA)
- Strong support zone: $4,200-$4,250 (previous consolidation area)
- Major support: $4,175 (200 SMA)
The broken channel resistance around $4,350-$4,370 will be the critical level to watch for any near-term pullbacks.
If this level holds as support, it would confirm the breakout and provide a solid foundation for another leg higher.
Trading Outlook and Risk Assessment
Gold is in a strong short-term uptrend within a rising channel, but is short‑term overbought.
The current setup offers opportunities but requires careful risk management, given the overbought conditions
Risk‑reward now favors waiting for a pullback rather than initiating fresh longs.
Bullish Scenario
The technical breakout above the ascending channel, combined with all indicators aligned bullishly, supports a near-term move toward $4,500 and potentially $4,550-$4,600.
The fundamental backdrop of central bank buying, Fed rate cuts (even if delayed), and geopolitical uncertainty provides continued support.
Near-Term Correction Risk
The elevated RSI reading above 72 suggests some caution is warranted for new long entries at current levels.
A healthy pullback to the $4,350-$4,370 zone, where the broken channel resistance happened, would be a normal technical development
This could offer a better risk-reward opportunity for folks looking to join the trend.
A deeper retracement to the 50 SMA around $4,307 would still maintain the overall uptrend structure and might attract significant buying interest from institutional players looking for entry points.
Longer-Term Considerations
As long as the price remains above the 50-period moving average, the bullish structure remains firmly intact.
The 200-period SMA at $4,175 represents the last major line of defense for the long-term uptrend.
