Bank of America (BofA) said this week that several technical indicators suggest the recent surge in gold prices may be nearing exhaustion as the precious metal approaches the psychologically important $4,000-per-ounce mark.
“Earlier this year we presented bullish setups for precious metals,” BofA noted, adding that “gold joined the broader rally by breaking higher from its triangle formation.”
The bank explained that this breakout “unlocked significant upside targets that have since been reached,” but now cautions that “multiple time frame technical signals and conditions warn of uptrend exhaustion as gold nears $4,000/oz.”
According to BofA, gold has been “up seven consecutive weeks in a row,” a streak that historically precedes short-term weakness. The analysts highlighted that “since 1983, gold was lower 11 of 11 times four weeks later and 10 of 11 times five weeks later.” They added that gold is currently trading “~21% above its 200-day moving average” and “~70% above its 200-week moving average,” both levels often linked with market tops.
Momentum indicators are also signaling potential fatigue. The bank said the “14-day RSI has been overbought for a month,” while the “14-week RSI shows a three-peaked bearish divergence.”
BofA further pointed out that “multiple time frames are showing DeMark exhaustion counts,” with daily, weekly, and monthly charts all flashing sell signals.
Still, analysts emphasized that the current rally remains less extreme than past bull runs. The bank said that the move is “smaller than those of the 1970s and 2000s,” implying that “further upside over the next few years is certainly possible.”
Even so, BofA urged investors to stay cautious, citing “round-number resistance at $4,000” and warning that a near-term pullback could occur before the next potential leg higher toward $5,000.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.