Gold Retreats from $4,000 as Rally Shows Signs of Exhaustion

Gold's record-breaking rally faltered after briefly surpassing $4,000 per troy ounce, with Bank of America warning of elevated correction risks. The precious metal remains in overbought territory according to its 14-day RSI, having climbed for seven consecutive weeks—a pattern that historically precedes pullbacks.

Central bank demand and ETF inflows have fueled gold's best performance since 1979, alongside growing interest in alternative assets like cryptocurrencies as hedges against dollar weakness. This 'debasement trade' reflects broader macroeconomic uncertainties, though the yellow metal now faces technical headwinds.

Market technicians note Gold has declined 11 out of 11 times four weeks after similar overbought conditions. The fourth quarter may see consolidation as the market digests this year's parabolic move.