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Gold prices fall from record highs; technical signs flash overbought

Published 04/05/2024, 12:18 AM
© Reuters.

Investing.com-- Gold prices fell in Asian trade on Friday, retreating from recent record peaks in anticipation of key U.S. labor data that is likely to factor into the outlook for interest rates.

A key technical indicator for spot gold prices also showed that buying momentum was running dry after a strong run-up through March and early-April.

Still, the yellow metal may benefit from increased safe haven demand, especially with the prospect of worsening geopolitical conditions in the Middle East amid saber rattling between Iran and Israel. 

Spot gold fell 0.6% to $2,277.10 an ounce after hitting a record high of $2,305.31 on Thursday, while gold futures expiring in June fell 0.6% to $2,295.50 an ounce by 00:03 ET (04:03 GMT), after hitting a record high of $2,325.30 an ounce on Thursday.

A recovery in the dollar also pressured gold, as the greenback rose tracking a slew of hawkish comments from Federal Reserve officials. 

RSI shows gold overbought, due for profit-taking 

Gold’s 14-week relative strength index- which gauges buying and selling momentum for the yellow metal- showed spot prices were well within overbought territory. The RSI rose as high as 82 earlier this week, and was currently at about 74.9- indicating that the yellow metal remained overbought despite Friday’s price losses.

An RSI reading above 70 indicates an asset is overbought. 

The yellow metal had shrugged off recent strength in the dollar and hawkish warnings on U.S. interest rates, as it benefited from increased safe haven demand on tensions in the Middle East.

But traders now appeared to be locking in some profits ahead of key nonfarm payrolls data due later on Friday. U.S. consumer price index inflation data is also on tap next week.

Other precious metals also retreated, with platinum futures down 1.1% at $935.60 an ounce, while silver futures fell 2.2% to $26.648 an ounce. 

Copper prices cool after rallying to 15-mth peaks; more China cues awaited 

Among industrial metals, copper prices saw some profit-taking on Friday after surging to 15-month highs earlier this week. The red metal was boosted by positive economic readings from top importer China, as well as the prospect of tighter supplies in the coming months.

Three-month copper futures on the London Metal Exchange fell 1.3% to $9,261 a ton, while one-month U.S. copper futures fell 0.8% to $4.1892 a pound.

Both contracts remained close to 15-month peaks hit on Thursday.

Markets were now awaiting inflation and trade data from China, due next week, for more economic cues on the world’s largest copper importer.

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