(Kitco News) – Gold prices are holding above the $5,100 February breakout level this week, but the yellow metal faces major resistance between $5,200 and $5,300 per ounce, even as the technical picture looks increasingly like the one before the January selloff, with a breach of $5,100 signaling downside risk toward $4,800 and even $4,380, according to Razan Hilal, market analyst at Forex.com.
Hilal noted that spot gold is managing to hold above the $5,100 per ounce breakout level as the yellow metal reflects renewed safe haven demand stemming from trade policy uncertainty.
“The move has returned Gold to clearly bullish technical territory after February volatility, reinforcing investor conviction in precious metals,” she said. “Yet this strength is colliding with historically stretched momentum readings, raising questions about sustainability. The current setup presents a decisive inflection point where upside continuation and structural pullback risk coexist.”
Hilal cautioned that the current gold breakout now faces the risk of momentum exhaustion, with the precious metal now confronting technical conditions that historically preceded extended pullbacks.
She warned that the price action is “leaning towards the bull side, as it holds above a previous resistance level for the price action across the month of February,” with the trade above the $5,100 level confirming the structural breakout. She cautioned, however, that the Relative Strength Index has returned to the overbought levels from January, just before that sharp selloff from all-time highs, saying the current momentum profile mirrors prior price peaks. Hilal said that as a result, gold could struggle to sustain its gains above $5,000 per ounce unless it decisively breaks through resistance near $5,200 and $5,300, as stretched positioning increases the yellow metal’s vulnerability to sharp corrective moves.
On the downside, gold’s clear support levels outline the structural path lower if the price does close below $5,100 support. “Should we close back below the $5,100 barrier, then we might be expecting consolidation risks once again within the zone extending all the way down towards the $4,800 mark,” Hilal said, adding that if this level does not hold, gold could challenge subsequent support at $4,600, $4,530, and $4,380, reopening zones that previously acted as demand clusters earlier in February.
Because of this, Hilal said that the gold rally now depends not only on macro-driven safe haven flows, but also on whether or not buyers can defend the breakout zone before momentum exhaustion shifts control back to sellers.
Gold prices have successfully broken through the $5,200 per ounce level early Wednesday afternoon, but after hitting the session high of $5,217.78 at 12:11 pm Eastern, prices have pulled back closer to support, and there are still hours remaining before the close.
Spot gold last traded at $5,207.02 per ounce for a gain of 1.23% on the daily chart.
