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Gold Price Targets: XAU/USD Recovery to be Short-lived- GLD Outlook

Gold Price Targets: XAU/USD Recovery to be Short-lived- GLD Outlook

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Gold prices are poised to snap a three-week losing streak with XAU/USD rallying more than 0.9% to trade at 1502 ahead of the New York close on Friday. Despite the recent advance, gold remains vulnerable heading into the September close with price continuing to consolidate just below long-term uptrend resistance. These are the updated targets and invalidation levels that matter on the XAU/USD weekly charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.

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Gold Price Chart - XAU/USD Weekly

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

Chart Prepared by Michael Boutros, Technical Strategist; Gold on Tradingview

Notes: In my last Gold Price Weekly Outlook we noted that, “The medium-term risk remains lower for gold but we’re looking for support nearby.” XAU/USD tested last week’s low at 1483on the back of the FOMC interest rate decision before rebounding with price respecting the weekly opening-range into Friday trade.

The key gold trading levels remain unchanged from last week with price holding just below critical resistance at 1522/26 – a region defined by the late 2011 & 2012 swing lows. Ultimately a breach / close above this threshold is needed to fuel the next leg higher in XAU/USD.

That said, the medium-term risk remains tilted to the downside while below this threshold with initial weekly support eyed at the highlighted trendline confluence around ~1465and the 100% extension at 1451 – weakness beyond this level would suggest a larger correction is underway. A topside breach exposes subsequent resistance objectives at 1558 and the key 61.8% retracement of the decline off the 2011 record highs at 1586.

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

Bottom line: Gold prices are in consolidation just below long-term trend resistance. From at trading standpoint, looking sideways to lower over the next few weeks with a larger decline to offer more favorable long-entries closer to trend support. IF price breaks higher, we’ll look to fade weakness into 1522 targeting a stretch towards new highs in the precious metal. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

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Gold Trader Sentiment - XAU/USD Price Chart

Gold Trader Sentiment - XAU/USD Price Chart - GLD Trade Outlook - XAUUSD Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +2.18 (68.6% of traders are long) – bearish reading
  • Long positions are 1.5% lower than yesterday and 5.4% higher from last week
  • Short positions are 13.4% higher than yesterday and 12.0% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Spot Gold price trend may soon reverse higher despite the fact traders remain net-long.

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


Previous Weekly Technical Charts

--- 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.