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Gold Price Weekly Outlook: Gold Rips to 5-Year Highs- Buyers Beware

Gold Price Weekly Outlook: Gold Rips to 5-Year Highs- Buyers Beware

2019-06-21 14:00:00
Michael Boutros, Technical Strategist
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Gold prices are up more than 4.1% this week and for a fifth consecutive weekly advance in XAU/USD. The rally marks the largest single-week advance since April of 2016 with price now probing a key resistance zone at fresh five-year highs. These are the updated targets and invalidation levels that matter on the XAU/USD weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this setup and more.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Price Chart - XAU/USD Weekly

Gold Price Chart - XAU/USD Weekly Technical Outlook - GLD Forecast

Notes: In my last Gold Price Outlook we noted that the, “The weekly opening-range is set in Gold heading into the FOMC interest rate decision later today – look for the break…. A topside breach keeps the focus on subsequent resistance objectives at the 2016 high-week close at 1366 and the 38.2% retracement / 2014 high at 1380/92 (critical).” A breakout post-Fed led the advance with the rally taking XAU/USD to fresh multi-year highs (high registered at 1411). The focus is on a weekly close heading into Friday with price now testing key resistance at 1380/92 – note that basic parallel / channel resistance converges on this zone and further highlights its technical significance.

A close above this threshold keeps the focus on subsequent topside objectives at 1433 and the 100% extension of the late-2015 advance at 1451- look for a bigger reaction there IF reached. Interim support now 1366 backed by the 2018 high-week close at 1350. Broader bearish invalidation now raised to the February high-week close at 1327.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: The immediate focus is on a weekly close above this critical resistance zone at multi-year highs. A close above 1392 would keep the immediate long-bias viable heading into the final week of June trade. Failure here would highlight the risk for near-term exhaustion. From a trading standpoint, a good place to reduce long-exposure / raise protective stop. Ultimately, a pullback would offer more favorable entries closer to the former 2016 trendline. I’ll publish an updated Gold Price Outlook once we get further clarity in near-term price action next week. Review our latest Gold 2Q forecasts for a longer-term look at the technical picture for XAU/USD prices.

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Gold Trader Sentiment (XAU/USD)

Gold Trader Sentiment - GLD Positioning - XAU/USD Price Chart
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +1.37 (57.8% of traders are long) – weak bearish reading
  • Long positions are 11.5% higher than yesterday and 6.3% higher from last week
  • Short positions are 1.3% lower than yesterday and 3.6% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger Gold price (XAU/USD) -bearish contrarian trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

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Previous Weekly Technical Charts

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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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