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Gold Price Targets: Bulls Risk Exhaustion as XAU/USD Eyes Resistance

Gold Price Targets: Bulls Risk Exhaustion as XAU/USD Eyes Resistance

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Gold Price Targets: Bulls Risk Exhaustion as XAU/USD Eyes Resistance

Gold prices are poised to mark the third consecutive weekly advance with the precious metal rallying more than 1% to trade at 1510 ahead of the close of New York trade on Friday. Prices pared a portion of the early-week gains after reversing off critical resistance and our focus is on this key zone heading into next week. These are the updated targets and invalidation levels that matter on the XAU/USD price daily chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.

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Gold Price Chart - XAU/USD Weekly

XAUUSD Price Chart

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

Notes:In my last Gold Weekly PriceOutlook we noted that XAU/USD was, “testing major confluence resistance up here - watch the weekly close. The risk for a near-term pullback / correction mounts if we settle below 1526.” Price has continued to respect this threshold as resistance with gold poised to post an outside-day reversal ahead of the close on Friday.

While the broader outlook remains weighted to the topside, the immediate advance remains vulnerable while below this threshold with daily support eyed at 1482- weakness beyond this threshold would suggest a larger correction is underway targeting former channel resistance (currently ~1460s) with broader bullish invalidation now raised to 1451. A topside breach / weekly close above is needed to mark resumption with subsequent resistance objectives eyed at 1558 and the 61.8% retracement of the decline off the record highs at 1585.

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 testing long-term uptrend resistance up here and the advance remains vulnerable while below. From a trading standpoint, a good spot to reduce long-exposure / raise protective stops. Look for signs of price exhaustion while below the upper parallel with a break below 1482 needed to suggest a more significant near-term high may be in place. 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)

XAUUSD Client Sentiment Chart
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +1.68 (62.7% of traders are long) – bearish reading
  • Long positions are 1.4% lower than yesterday and 4.1% higher from last week
  • Short positions are 3.2% higher than yesterday and 4.8% lower 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 but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Spot Gold trading bias from a sentiment standpoint.

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


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.