06 Oct 2025
Gold rally 'running out of steam' as technical indicators show potential slowdown
Bank of America has recently indicated that several technical indicators are signaling a potential slowdown in the impressive rally of gold prices as they approach the critical threshold of $4,000 per ounce.
Earlier this year, the bank highlighted bullish setups for precious metals, noting that gold had successfully broken out from a triangle formation, which allowed for significant upside targets to be unlocked and subsequently reached.
However, as gold nears the $4,000 mark, BofA warns that various technical signals across multiple time frames suggest that the current uptrend may be running out of steam.
The bank pointed out that gold has experienced a remarkable seven consecutive weeks of gains, a pattern that historically has been followed by short-term weaknesses. An analysis of past trends reveals that since 1983, gold prices have declined 11 out of 11 times four weeks after such a streak, and 10 out of 11 times five weeks later.
This historical context raises concerns about the sustainability of the current rally. Furthermore, gold is currently trading approximately 21% above its 200-day moving average and about 70% above its 200-week moving average, levels that have previously indicated market peaks.
In addition to these observations, momentum indicators also suggest that the market may be experiencing fatigue. The 14-day Relative Strength Index (RSI) has remained in the overbought territory for an entire month, while the 14-week RSI is exhibiting a three-peaked bearish divergence, a warning sign for potential price corrections.
Analysts at BofA have also noted that DeMark exhaustion counts are appearing across multiple time frames, with daily, weekly, and monthly charts all triggering sell signals.
Despite these cautionary indicators, BofA maintains that the current gold boom is still smaller in scale compared to the significant rallies witnessed in the 1970s and 2000s, which implies that there could still be further upside potential in the coming years.
The bank does, however, advise investors to exercise caution as they approach the round-number resistance at $4,000. A pullback in prices could be likely before any subsequent upward movement toward the ambitious target of $5,000 per ounce.
In conclusion, while the technical indicators suggest a potential slowdown in gold's rally, the historical context and ongoing market dynamics indicate that opportunities for growth may still exist. Investors should remain vigilant, closely monitoring market conditions and technical signals as they navigate this complex landscape.
As gold continues to be a safe haven asset amidst economic uncertainties, understanding these indicators will be crucial for making informed investment decisions.
