Gold Prices Retreat from Record Highs; Technical Indicators Signal Overbought Conditions

Gold prices dipped in Asian trading on Friday, stepping back from recent record highs in anticipation of crucial U.S. labor data that could influence interest rate expectations. A key technical indicator for spot gold prices also signaled a slowdown in buying momentum following a robust rally throughout March and early April.

However, the precious metal may still find support from increased safe-haven demand, particularly amid escalating geopolitical tensions in the Middle East due to saber-rattling between Iran and Israel. Spot gold retreated by 0.6% to $2,277.10 an ounce after reaching a record peak of $2,305.31 on Thursday. Meanwhile, gold futures expiring in June declined by 0.6% to $2,295.50 an ounce by 00:03 ET (04:03 GMT), following a record high of $2,325.30 an ounce on Thursday.

A rebound in the dollar also weighed on gold prices, as the greenback strengthened following a series of hawkish remarks from Federal Reserve officials. The 14-week relative strength index (RSI) for gold, which measures buying and selling momentum, indicated that spot prices were firmly within overbought territory, reaching as high as 82 earlier in the week and currently standing at about 74.9, suggesting continued overbought conditions despite Friday’s price decline. An RSI reading above 70 signals that an asset is overbought.

Gold had previously disregarded the dollar’s strength and warnings of U.S. interest rate hikes, benefiting instead from heightened safe-haven demand amidst Middle Eastern tensions. However, traders appeared to be securing profits ahead of the release of key nonfarm payrolls data later on Friday, with U.S. consumer price index inflation data scheduled for release next week.

In the broader precious metals market, platinum futures retreated by 1.1% to $935.60 an ounce, while silver futures dropped by 2.2% to $26.648 an ounce.

Turning to industrial metals, copper prices experienced some profit-taking on Friday after reaching 15-month highs earlier in the week. The red metal had been bolstered by positive economic indicators from top importer China, alongside expectations of tighter supplies in the coming months. Three-month copper futures on the London Metal Exchange fell by 1.3% to $9,261 a ton, while one-month U.S. copper futures declined by 0.8% to $4.1892 a pound, though both contracts remained near their 15-month peaks reached on Thursday. Investors are now awaiting inflation and trade data from China next week for further economic insights into the world’s largest copper importer.