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Gold Price Outlook: XAU Pull Back to Fibonacci Support

Gold Price Outlook: XAU Pull Back to Fibonacci Support

James Stanley, Senior Strategist

Gold Price Talking Points:

Gold Prices Pull Back to Support

Gold prices are currently testing a level of support at 1509 after setting another fresh six-year-high earlier this week. As discussed in yesterday’s webinar, the longer-term resistance zone that runs from 1509-1527 has helped Gold’s short-term price action build into a range; and a support inflection off of the 1509 level kept the door open for aggressive bullish trend strategies.

Gold Price Two Hour Chart

gold two hour price chart

Chart prepared by James Stanley; Gold on Tradingview

The Bigger Picture Backdrop for Gold Prices

Fear continues to populate the backdrop and for Gold prices, that’s generally a ‘good’ thing despite the related ramifications. As a number of risks remain in the headlines and at this point, the Fed has been noticeably silent on the matter; markets have been left to their own projections and prognostications and Gold prices have put in some serious incline already in 2019, continuing to push up to fresh six-year-highs despite remaining overbought. That’s what has quickly brought this zone back into play.

Gold Price Weekly Chart

gold weekly price chart

Chart prepared by James Stanley; Gold on Tradingview

The current zone of resistance comes from two different Fibonacci levels at 1509 and 1527, with the former of those prices as the 61.8% retracement of the 2012-2015 major move and the latter serving as the 23.6% marker of the longer-term bullish run from 1999 into the 2011 highs. I had started looking at this zone for topside target potential about a month ago and when price action had stalled in the 1421-1433 zone. But as risk aversion caught a bid around the FOMC rate cut and the tariff announcement that followed, bulls pressed the bid again to set even higher-highs.

Gold Price Four-Hour Chart

gold price four hour chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Price Strategy

As noted earlier, for aggressive strategies, the current area of support could remain usable, with initial targets set at short-term range resistance of 1527, which could be coupled with a break-even stop move so that the remainder of the position could be held for breakout scenarios.

A bit more conservatively, traders could look for a deeper pullback, plotting around the 1480 swing low from this week combined with the prior swing-high around 1475. If that doesn’t hold, a larger retracement might be afoot at which point bulls would likely want to exercise some patience. These deep overbought/oversold conditions could spell for two-way volatility if, in fact, semblance is restored and fear recedes. We may even see that prior zone of resistance that runs from 1421-1433 come back into play for a support test, and that’s like a drawdown that buyers would not want to hold long through. So, keeping risk limited remains the upmost of importance.

Gold Price Four-Hour Chart

gold four hour price chart

Chart prepared by James Stanley; Gold on Tradingview

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

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