Gold prices rebounded after oversold, has passed the "dangerous period"? Analyst: Sellers are taking control of the market

foreign exchange documentary platform- On Monday (June 10), spot gold rebounded by $17 after plunging in the previous trading day, closing near the $2,310/ounce mark. On Tuesday (June 11), spot gold fluctuated slightly in the Asian market and is currently trading near $2308.95/ounce. FXStreet analyst Christian Borjon Valencia recently wrote an analysis of the technical trend of gold prices.

Valencia wrote that despite the rise in US Treasury yields, gold prices remained strong. Upcoming US inflation data and Federal Reserve decisions could affect the future direction of gold.

The U.S. 10-year Treasury yield rose 3.5 basis points to 4.47% on Monday, which is a headwind for gold. As a result, the dollar index rose 0.23% to 105.17.

Spot gold rallied $17.07, or 0.74 percent, to close at $2310.81 an ounce on Monday.

Phillip Streerial, chief market strategist at Blue Line Futures, believes that gold prices seemed to have oversold on Friday, leading to bargain-hunting.

"With so much data and events coming out, there will be more volatility and more bright spots this week," Streerial said.

Spot gold closed last Friday plunged $82.09, down 3.46%, the price of gold closed at $2293.74/ounce.

In addition to investors buying dips, the geopolitical situation has also provided support for gold prices.

The British Sky News Channel reported on June 10 that Ukrainian sources said that fighter jets of the Ukrainian Armed Forces carried out the first attack on targets in Russia on the 9th.

The results of the operation are still being assessed, but it is certain that this is a "direct strike" and the first time the Ukrainian air force has used air-launched weapons to attack targets in Russia. Ukraine has previously used drones to attack targets in Russia. The use of fighter jets for a direct attack could be seen by Moscow as an escalation.

The latest technical analysis of gold

FXStreet analyst Christian Borjon Valencia pointed out that gold prices are consolidating above $2,300/oz, but there is a head and shoulders pattern on the technical graph. As shown by the Relative Strength Index (RSI), momentum has turned bearish, and the index has fallen below the mid-50 line, indicating that sellers are taking control of the market.

Therefore, if gold weakens further, sellers could push spot gold prices below $2,300 an ounce, Valencia said. Once below this level, the next target would be the May 3 low of $2,277 an ounce, followed by the March 21 high of $2,222 an ounce.

Once gold prices continue to weaken, buyers' next line of defense is around $2,200 an ounce.

(Daily chart of spot gold)

Valencia added that, on the other hand, if gold buyers push prices above $2,350 an ounce, prices are expected to consolidate in the $2,350-2,380 area.