Gold: The risk of a major pullback after the surge is looming.

Notizie in breve

Tread carefully with gold right now! Technical indicators suggest the metal is dangerously overbought—monthly RSI reached 95.6, likely the highest in 55 years, while weekly stands at 82.8 and daily at 88.5. I believe technical analysis isn't foolproof for gold, yet these figures are screaming caution. What's fascinating is today's eerie resemblance to 1979 before Reagan's presidency. Stagflation plagued us then; elevated CPI troubles us now. The Iranian hostage crisis followed the Islamic Revolution's overthrow of pro-American Shah Pahlavi then; today, Iran faces internal turmoil with mounting U.S. military pressure and potential strikes looming. Trump's strategy, including that MAGA slogan, even mirrors Reagan's 1980 playbook. Considering both technicals and historical parallels, gold might surge if U.S.-Iran tensions escalate further. However, here's the twist—Trump acts swiftly and boldly, so we could witness an abrupt Iran situation reversal, perhaps even an unexpected capitulation. Once that conflict subsides, expect gold to plummet sharply. Recall how gold tumbled from January through September 1980, bounced briefly, then declined nearly two years straight before recovering those levels in 2007-2008. With a possible government shutdown looming January 31 and Iran remaining volatile, shorting gold seems premature. Nevertheless, don't chase this rally recklessly! You can enter positions—just stay vigilant and monitor U.S.-Iran developments closely.

Author: TVBee

Be aware of the risk of a pullback in gold prices!

Technical analysis indicates that gold is overbought.

While it's true that technical analysis can be ineffective for assets like gold.

However, the monthly RSI is 95.6, the weekly RSI is 82.8, and the daily RSI is 88.5, all indicating overbought conditions. The overbought level on the monthly chart is probably the highest in 55 years.

History is strikingly similar

First, comparing history using logarithmic coordinates, the present situation is somewhat similar to that before Reagan took office in 1979.

Second, the US economy was experiencing stagflation at the time, but now the CPI is relatively high.

Third, it was during the Iranian hostage crisis (after the Islamic Revolution, the pro-American prince Pahlavi was overthrown and went into exile, and Iranian students stormed the US embassy, ​​taking diplomats hostage and demanding that the US hand over Pahlavi).

Iran is currently experiencing internal turmoil, and the United States is exerting military pressure on Iran, with the possibility of military action not ruled out.

Fourth, even many of Trump's actions, including the MAGA slogan, bear some resemblance to Reagan's when he took office in 1980.

In conclusion

By comparing technical factors and historical events, it is possible that gold will continue to rise as the US-Iran conflict escalates.

However, most of Trump's actions this year have been swift and decisive, raising concerns about a potential reversal in the US-Iran situation (such as Iran suddenly surrendering). After the conflict subsides, be wary of a potential pullback in gold prices.

From January to September 1980, gold prices declined before rebounding. Then, from September 1980 to June 1982, they fell continuously for nearly two years, finally returning to their previous highs in 2007-2008.

Short selling is not recommended in the short term, as the US government may enter a short-term shutdown on January 31, and the US-Iran situation has not yet calmed down.

However, caution is advised when chasing rallies! It's not that you can't buy, but it's recommended to be highly sensitive and closely monitor US-Iran events.