Yahoo Finance Gold Slips After Topping $2,400 as Rally Is Seen as Overextended
(Bloomberg) -- Gold declined after surging to a fresh record as investors booked profit in a price rally that’s seen as overextended.
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Bullion broke the $2,400-an-ounce mark for the first time early Friday, climbing as much as 2.5% to $2,431.52 before erasing gains to fall as much as 1.4%. The quick intraday turnaround isn’t uncommon for the precious metal as its daily movement has largely been dictated by economic data and interest-rate expectations for the past few months.
“The markets have become rather disorderly as convexity kicks in and it just starts trading big figure to big figure,” said Nicky Shiels, head of metals strategy at Geneva-based MKS PAMP SA.
The precious metal has advanced more than 13% so far this year, exceeding the 13% advance registered for all of last year. Its rally and often-outsized moves have left some onlookers puzzled because of the lack of any obvious triggers — particularly as the outlook for interest-rate cuts by the Federal Reserve has become muddier in recent weeks.
“We do feel that the market has become overextended and that will lead to a liquidation selling,” said Philip Newman, managing director at consultancy Metals Focus. “Any liquidations, any correction would be short-lived and would present a very strong buying opportunity.”
Gold’s 14-day relative-strength index was hovering near 80, well beyond the level that some investors see as overbought, pointing to a potential pause.
Bullion is still on course for its fourth weekly advance, the longest winning streak since early 2023.
Earlier Friday, gold was boosted by elevated tensions in the Middle East. Israel is bracing for a direct and unprecedented attack by Iran on government targets as soon as Saturday, according to people familiar with western intelligence assessments, a move that has the potential to trigger an all-out regional war.
Other factors including geopolitical and financial risks as well as concerns over sticky long-term inflation are underpinning prices. Central banks buying, led by China, have added some bullish momentum.
Spot gold was down 1.3% to $2,341.14 an ounce at 2:39 p.m. in New York.
Silver experienced a similar turnaround as gold. The white metal fell as much as 1.4% after earlier rallying to as high as $29.797 an ounce, the highest since February 2021.
Platinum and palladium wavered while the Bloomberg Dollar Spot Index traded at the highest level since November. A stronger US currency is typically a headwind for commodities priced in the greenback as it can dull interest from overseas buyers.
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