Gold prices posted a modest recovery on Tuesday, but technical indicators suggest the precious metal may remain under pressure in the near term, according to analysts at RHB Research.
The COMEX gold futures contract rose by US$13.60 to close at US$4,519.90 an ounce after fluctuating throughout the trading session. Prices touched an intraday high of US$4,571.30 before retreating and settling slightly higher for the day.
Despite the rebound, RHB said the overall market sentiment remains cautious as momentum indicators have yet to signal a convincing return of buying interest.
“The recent price recovery is encouraging, but the market has not generated sufficient bullish momentum to confirm a sustained uptrend,” the research house said in a technical note.
Analysts noted that gold is currently trading below key moving average levels, which continue to act as resistance and suggest that sellers still have the upper hand.
As a result, gold prices are expected to move within a consolidation range in the short term while investors assess the next market direction.
RHB maintained its bearish outlook on the metal and warned that a break below the US$4,400 support level could trigger another round of selling pressure.
Should that occur, gold prices may slide towards the next support zone around US$4,250 an ounce.
On the upside, resistance is expected around US$4,650, with a stronger barrier located at US$4,850.
The research house advised traders holding short positions to maintain their stance while closely monitoring market developments.
Gold has experienced heightened volatility in recent months as investors react to shifting interest rate expectations, geopolitical developments and global economic uncertainty.
While the latest rebound has offered some relief, analysts believe stronger buying momentum will be needed before the market can establish a more durable recovery trend.
