Things are certainly heating up as we clock into the final trading day of January. Precious metals were hit by a quick bout of profit-taking in US trading yesterday, which briefly sent gold down to a low of $5,097. Dip buyers didn't take long to step in but since then, the volatility swings are very much continuing.
Of note, dip buyers put up a defense at a key near-term level in defending the 100-hour moving average. That is also helped by bids layered at the $5,100 mark perhaps. Looking closer at price action, things are looking dicey now with gold dipping back under the key near-term level (red line):
A firm break under the 100-hour moving average of $5,225 will help to keep buyers and those in long positions on their toes. That as profit-taking action could hit hard and fast, resulting in a more significant correction.
As a reminder, profit-taking begets profit-taking and is a cascading move when it comes to market sentiment. That especially on any asset that goes parabolic, like what we've seen with gold and silver this month. So, just be wary of that.
For now, the technical lines continue to suggest that we're not quite there yet as dip buyers are still hanging on. I would argue a firmer break under the $5,100 mark as well as the 200-hour moving average (blue line) would be much needed to confirm a potential for a much stronger retracement in price action.
The other thing to note is that the January seasonal tailwind is coming to an end for gold. February is still a decent month for gold, with the precious metal average roughly 1% gains on the second month of the new year over the past two decades. That being said, gold has traded down in 5 out of the last 8 February months. And in that stretch, a gain in January has coincided with a corresponding decline in February for gold prices with exception to 2025. So, make what you will of that.
