Gold Price Approaching an Important Set of Levels
Gold/Silver Technical Outlook:
- XAU/USD is running towards confluent resistance via 200-day and August high
- If Gold can hit this area then look for a reaction to occur
Spot gold (XAU/USD) has been on its best run in quite some time, bringing into play the possibility of hitting an important area of resistance. There is confluence between the 200-day MA and the August high at 1807.75.
This would be a good spot to look for a reaction out of gold and for a pullback to develop at the least, if not more. Just looking at the pullback scenario a decline down towards the 1730 area where support from September and October lie could be in the works soon.
Whether that support holds on a pullback is of course yet to be seen, but could be perhaps a good spot for dip-buyers to look to establish positions. If price does run into resistance, from a tactical standpoint, those already long may look at tightening up risk, and for would-be shorts it could offer a good spot to fade the rally.
Looking at the big picture, if the dollar-on, risk-off theme comes back into play again, a scenario I see as likely to happen, then it is hard to imagine gold being capable of continuing to truck higher. But if we don’t see the dollar-on/risk-off theme resume then gold is in good shape.
And it is possible as the macro landscape evolves we see gold start to operate a little more freely from the dollar-on/risk-off theme and buck the trend. Time will tell, but for now sticking to the near-term scenarios outlined above and see how things shake out before drawing any further conclusions.
Gold (XAU/USD) Price Daily Chart
Gold Chart by TradingView
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.