Central Bank Gold Purchases Reach Record Level

Record gold purchases by central banks are creating structural demand support for GLD, and the news provides a positive backdrop over the medium to long term. However, technical indicators are flashing an overbought signal in the short term: RSI14 at 69.9 is pressing against the 70 threshold and may have consumed part of the 1.26% rally momentum seen over the past 24 hours. MACD remaining above its signal line and in positive territory supports the view that the trend is still upward. Nevertheless, with the price trading well above the SMA20 and SMA50, the risk of short-term consolidation or profit-taking increases. For this reason, while a moderately upward bias is expected over the 1-3 day outlook, the possibility of an RSI-driven pullback should not be disregarded.