Gold surged to a fresh record on Monday, capping one of its strongest rallies in modern history, but technical indicators are now warning that the move may be overstretched.
In this case, on the monthly chart, gold’s relative strength index (RSI) has climbed to roughly 93, the highest reading ever recorded for the metal.
Notably, an RSI above 70 signals overbought conditions, above 80 is considered extreme, and readings above 90 have historically marked unsustainable momentum, often followed by sharp corrections or prolonged consolidation.
Gold has never sustained a monthly RSI at this level without a significant pullback or a multi-year pause.
This technical warning comes as some analysts caution that the current momentum may be vulnerable to profit-taking.
Gold hits new record highs
It also coincides with spot gold briefly reaching about $4,420 an ounce before easing. Gains now exceed 68% for the year, the strongest annual rise since 1979. By press time, the metal was trading near $4,412, up 1.6% on the day.
The rally has been driven by expectations of U.S. interest rate cuts, a weaker dollar, strong safe-haven demand, and escalating geopolitical risks.
Markets are pricing in two Federal Reserve rate cuts in 2026 following softer U.S. inflation and labor data. Lower rate expectations tend to favor non-yielding assets such as gold, as bond returns become less attractive.
Geopolitical tensions, including tighter U.S. pressure on Venezuelan oil exports and stalled negotiations between Ukraine and Russia, have further supported demand.
Indeed, gold began the year near $2,600 an ounce and advanced steadily as trade tensions, tariff risks, and uncertainty around U.S. monetary policy intensified. Silver and platinum have also rallied sharply, with silver hitting a record high.
Another key driver has been sustained central bank buying, as institutions increase physical gold reserves to hedge economic uncertainty, reduce reliance on the dollar, and diversify portfolios, a trend Goldman Sachs expects to continue into 2026.
A weaker U.S. dollar has further supported prices by making gold cheaper for overseas buyers.
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