- Updated weekly technicals on Gold – price rally testing Fibonacci resistance at 1322
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Gold prices are posed to close higher for the second consecutive week with the precious metal up nearly 1.5% to trade at 1322 ahead of the New York close on Friday. Here are the key targets & invalidation levels that matter on the Gold (XAU/USD) weekly chart.
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Notes:In my previous Gold Weekly Technical Outlook we noted that price was approaching downtrend resistance with, ‘A breach/close above 1302 still needed to validate the breakout eyeing initial Fibonacci resistance at 1322.’ Bullion rallied to a high at 1326 this week before pulling back and while the broader outlook remains weighed to the topside, the immediate advance may be vulnerable while below this threshold.
Initial support now rests back at 1302 with near-term bullish invalidation raised to the highlighted trendline confluence around ~1290. A breach higher from here targets the 2018 high-week close at 1350 backed closely by the 2016 trendline just higher around ~1360s.
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The Gold price breakout has achieved our initial resistance target and leaves the immediate advance vulnerable near-term. From a trading standpoint, a good place to reduce long-exposure / raise protective stops and look for the pullback. A correction may offer more favorable entries lower down near- slope support but ultimately, we’re looking for the break higher. Review my latest Gold Price Outlook for a closer look at the near-term trading levels.
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Gold Trader Sentiment
Looking for a fundamental perspective on Gold? Check out the Weekly Gold Fundamental Forecast.
- A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +2.11 (67.9% of traders are long) – bearish reading
- Long positions are 0.3% lower than yesterday and 3.9% lower from last week
- Short positions are 1.0% higher than yesterday and 2.4% 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold (XAU/USD) 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!
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
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