Gold (XAU/USD) has corrected 5% from its May high of $2,400 to the current $2,280 level. Despite the pullback, the broader bullish structure remains intact.
Why This Pullback Is Healthy
After a 25% rally from the October 2025 low of $1,920, a correction of 5-8% is normal and healthy. The pullback brings key technical indicators back from overbought territory:
- RSI(14) has cooled from 78 to 52 — neutral territory
- Price has retraced to the 38.2% Fibonacci level ($2,285)
- The 50-day MA at $2,290 is providing dynamic support
Fundamental Backdrop
The reasons for gold's rally haven't changed:
- Central bank buying: PBOC, RBI, and Turkish central bank continue accumulating
- Geopolitical premium: Middle East tensions keep safe-haven bid alive
- Inflation hedge: Real yields remain historically accommodative
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Trade Setup
Parameter | Level |
|---|---|
Entry zone | $2,270-2,290 |
Stop loss | $2,220 (below 61.8% Fib) |
Target 1 | $2,400 (recent high) |
Target 2 | $2,500 (measured move) |
Risk:Reward | 1:2.5 minimum |
Gold tends to consolidate in $100-150 ranges before the next leg. The $2,270-2,400 range may compress before breaking higher in Q3.