A Possibility of a Correction in #XAUUSD Appeared

After forming a new ATH at $2940/oz during yesterday’s Asian session, gold proceeded to violently pullback to the lower edge of the channel we have been following for the past few weeks.

The dynamics were guided by profit-taking before the J. Powell testimony to the US Senate and key inflation data due today (15:30 MT time). In his speech, the Fed Chair used cautious tones, hinting that further easing is not required at the moment, but, in case political pressures strenghten, the Fed might cede and lower the rates quicker than anticipated.

Overall, if you read between the lines, it was a slightly bullish signal for gold. Fundamentally speaking, the rally must go on. But what to do, if you have not managed to join it yet, and now everything looks too expensive?

Don’t worry! Look at the daily chart: a long-legged doji candlestick formed, on the highest volume since the trend began on December 19, 2024. Usually, this kind of formation leads to a correction or a consolidation phase. Probably, the US inflation data will be a pivotal point to prove this pattern right or wrong.

So, what should you do? Gold is overbought only on the daily chart now. You can wait for today’s inflation data and, if prices increase less than anticipated by the majority consensus, you can proceed to buy #XAUUSD. However, keep in mind that a Stop-Loss is necessary, as gold hasn’t been retracing for a month straight.

In case inflation increases more than expected, this could be the trigger for a correction in the metal, which can be used to speculate short, or better, to slowly form your long position for the medium-long term.

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