Saad Ullah
Gold (XAU) has pushed into overbought territory after reaching the 3.618 Fibonacci extension, but technical signals now point toward an 8% pullback. The precious metal's impressive rally is showing signs of exhaustion at key resistance levels, setting the stage for a healthy correction before the next leg higher.
Recent Price Action
The yellow metal has climbed toward the $3,844 zone, testing the 3.618 Fibonacci extension after a strong bullish run. While momentum remains positive, price is beginning to stall at this resistance cluster. Trader NOCTIS suggests an 8% correction could develop here, giving the market room to reset before attempting another push higher.
This type of pullback would be normal after such a sharp advance and could actually strengthen the uptrend by shaking out weak hands.
Key Technical Levels
The Fibonacci extensions map out critical zones to watch:
- 1.618 near $3,725 – now acts as potential support following the breakout
- 2.618 around $3,790 – served as a consolidation point during the rally
- 3.618 near $3,844 – current resistance where sellers are finally stepping in
- 4.618 near $3,955 – represents the next major bullish target if buying pressure returns
The highlighted orange zone projects a correction area between $3,650 and $3,725, which should attract buyers looking to defend the uptrend.
Market Drivers
The Federal Reserve's policy outlook continues shaping precious metals expectations as traders price in potential easing over the coming years. Geopolitical tensions provide ongoing safe-haven demand that supports gold even during corrective phases. However, parabolic price moves like this one typically invite sharp retracements as momentum traders take profits and the market digests gains.
Saad Ullah
