Gold’s current momentum at new records is facing the threat of a correction as momentum indicators suggest the precious metal’s rally might stall.

Notably, gold has surged 40% year to date, peaking around the $3,700 spot, but has since retreated slightly to trade at $3,665 as of press time, down about 0.67% in the past 24 hours.

Regarding the outlook, the SPDR Gold Trust (GLD), the largest gold-backed exchange-traded fund, has seen its Relative Strength Index (RSI) spike to 79.83, marking its most overbought level since April 2024.

Historically, RSI readings above 70 often precede short-term corrections as traders lock in profits. 

Notably, gold’s relentless climb has been fueled by ongoing macroeconomic uncertainty, robust demand from central banks, and safe-haven flows amid market volatility.

Gold bullish fundamentals 

Indeed, with technical indicators suggesting a possible correction on the horizon, especially given the Federal Reserve’s expected interest rate cut, the asset may offer additional buying opportunities under looser monetary conditions. 

In this line, lower interest rates typically support gold by reducing its opportunity cost, pressuring the dollar, and strengthening its appeal as an inflation hedge and safe haven.

At the same time, Wall Street remains bullish on the traditional safe-haven asset, with banking giant Goldman Sachs noting that gold could rally to $5,000 if investors reduce exposure to U.S. Treasury bonds in the event of a recession.

As reported by Finbold, Goldman Sachs projects that gold will reach $3,700 by the end of 2025 and $4,000 by mid-2026, driven by central bank buying and strong demand from emerging markets. 

In a more bullish scenario, the bank noted that if 1% of the $27 trillion U.S. Treasury market shifted into gold, prices could reach $5,000.

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