Gold Holds Near $4,700 as Overbought Indicators Clash With Unabated Safe-Haven Demand

Gold at $4,698.99 with RSI above 80 signals overbought, yet hot PPI data and geopolitical tensions create opposing forces. Central bank buying provides floor. Key resistance at $4,748.

The gold market is delivering a mixed message: a Relative Strength Index deep in overbought territory, yet the LBMA price refuses to retreat from the $4,700 neighborhood. On Thursday, the metal settled at $4,698.99 per troy ounce, up $10 or 0.21% from the prior close, after carving out a session low of $4,671.88 and a high of $4,718.09. For euro-based investors, the gain evaporated under a slightly firmer common currency, leaving bullion at €4,004.58.

Two distinctly different forces are pulling the yellow metal in opposite directions. On one side, hot US producer-price data has poured cold water on hopes for near-term rate cuts. The April PPI jumped 6% year-over-year, with the core reading stripping out volatile components at 5.2%. The 10-year Treasury yield responded by climbing toward 4.5%, and the CME Group’s FedWatch Tool now shows nearly 96% of traders betting the Federal Reserve will leave rates unchanged in June. Higher yields typically sap the appeal of non-yielding gold.

On the other side, geopolitical tensions and a steady stream of institutional buying are underpinning prices. Escalating friction between Israel and Iran continues to keep risk aversion elevated, while the World Gold Council has repeatedly flagged the fragility of global sovereign debt – a factor that bolsters gold’s role as a hedge against tail-risk scenarios. Meanwhile, the Trump-Xi summit in Beijing adds another layer of uncertainty: market participants are watching for any trade-related breakthrough, though most analysts expect only pragmatic deals on agricultural goods or aircraft rather than a fundamental reset. A concrete de-escalation would dent safe-haven demand, but a failure to ease tensions could push the metal higher.

Central banks are providing a robust fundamental backstop. Global gold demand reached 1,231 tonnes in the first quarter, with the total value hitting a record $193 billion. Net central-bank purchases stood at 244 tonnes, led by Poland, which added 31 tonnes to its reserves, and China, which lifted its holdings to over 2,300 tonnes. These official-sector buyers are motivated by geopolitical considerations and remain largely price-insensitive, creating a firm floor under the market.

The technical picture, however, is flashing caution. The LBMA gold price carries an RSI of 80.24 – firmly in overbought territory – and the stochastic RSI is even more stretched above 90. Both oscillators argue for a short-term consolidation or pullback. Yet the metal continues to trade comfortably above its 38-day moving average, and the broader uptrend remains intact. Near-term resistance is layered: the Thursday high of $4,718.09, then the 52-week peak around $4,748, and finally the 50-day average at $4,749. On the downside, initial support rests at $4,672, with a more solid floor near $4,688.

The key catalyst in the coming sessions will be the direction of US bond yields. Should the dollar remain soft and the Middle East stay tense, a retest of the $4,748 highs moves back into view. Conversely, a decisive turn in trade negotiations or a further rise in real rates could trigger the long-awaited technical correction. For now, gold’s conflicting signals leave traders in a state of watchful equilibrium.