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  • Gold continued scaling higher for the second consecutive session on Tuesday.
  • The technical set-up favours bulls and supports prospects for additional gains.
  • Slightly overbought conditions on hourly charts warrant some caution for bulls.

Gold built on its recent strong rebound from multi-week lows and gained some strong follow-through traction for the second consecutive session on Tuesday.

Sustained strength beyond 200-hour SMA and the 61.8% Fibonacci level of the $2075-$1863 corrective slide was seen as a key trigger for intraday bullish traders. The subsequent move above the key $2000 psychological mark might have set the stage for additional gains.

Bullish technical indicators on the daily chart add credence to the constructive outlook. However, RSI (14) on hourly charts have already moved on the verge of breaking into the overbought territory and warrant some caution for aggressive bullish traders.

This makes it prudent to wait for some consolidation or a modest pullback before positioning for any further near-term appreciating move. That said, the commodity seems poised to climb back towards testing the $2030-33 congestion zone.

The momentum could further get extended towards the next major hurdle near the $2050 horizontal zone. Some follow-through buying should pave the way for an extension of the positive move back towards record highs, around the $2075 region set on August 7.

On the flip side, any meaningful pullback will now be seen as a buying opportunity. This, in turn, should help limit the downside near the $2000 mark, which is closely followed by support near the $1992-90 area (61.8% Fibo./200-hour SMA).

Gold 1-hourly chart

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Technical levels to watch