Gold (GCV25) remains in the spotlight this morning after flashing a rare technical signal: extreme overbought conditions not seen in nearly half a century.
According to a recent X post from Barchart, the Relative Strength Index (RSI) for gold now sits at 89.72 on the monthly chart, its highest reading since at least 1980.
The yellow metal has rallied sharply in recent months, driven by macroeconomic uncertainty, central bank buying, and investor demand for safe-haven assets.
Why Gold Prices Could Pull Back in the Near Term
RSI is a momentum indicator that measures the speed and magnitude of price movements. Readings above 70 typically suggest an asset is overbought, meaning it may be due for a pullback.
Gold’s relative strength index at a tad below 90, as highlighted by Barchart, is historically extreme. Monthly charts reflect long-term trends, so this level implies sustained bullish momentum.
On the flip side, however, it also warns of potential exhaustion. Traders often view such elevated RSI readings as a sign that prices could correct or consolidate.
Gold’s advance to new all-time highs this year has been relentless, but technical indicators like this suggest caution may be warranted in the short term.
Why Has Gold Rallied Hard in 2025?
Gold has rallied roughly 43% this year (based on the cash contract) due to a confluence of macroeconomic and geopolitical factors.
With central banks cutting rates globally, including the Federal Reserve’s recent 25-basis-points reduction, real yields have declined, boosting gold’s appeal.
Persistent inflation concerns, rising fiscal deficits, and geopolitical tensions in the Middle East and Europe, have driven demand for safe-haven assets.
Moreover, central banks have aggressively accumulated gold reserves in 2025, adding structural support to prices.
A weakening U.S. dollar and expectations of further monetary easing are keeping the bullish narrative alive, with some analysts now calling for gold prices to hit $5,000 by the end of 2025.
