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Gold Price Forecast: Gold Bear Market Rally or Reversal?

Gold Price Forecast: Gold Bear Market Rally or Reversal?

Michael Boutros, Strategist

Gold Technical Price Outlook: XAU/USD Weekly Trade Levels

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Gold prices are poised to snap a three-week losing streak with XAU/USD rallying more than 2.5% to trade at 1834 ahead of the New York close on Friday. The reversal off multi-month lows takes price into the first resistance target and while seasonal tendencies favor Gold here, we’re still looking to confirm an early month low the days ahead. These are the updated targets and invalidation levels that matter on the gold weekly charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold technical setup and more.

Gold Price Chart - XAU/USD Weekly

Gold price chart

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

Notes: In last month’s Gold Weekly PriceOutlook we noted that the recent sell-off had. “broken below key technical barriers and leaves the outlook for XAU/USD weighted to the downside heading into the close of the month.” Gold dropped another 2% into the November close before turning just cents ahead of confluence support at the 50% Fibonacci retracement of the yearly range at 1763 (low registered at 1764).

A four-day rally off this mark takes the recovery back in to initial resistance here at the September lows at 1849. Ultimately, a breach / close above the 2011 high-week close / high-close at 1897-1909. Note that weekly RSI reversed just ahead of 40 on this rebound and preserves the broader uptrend in momentum. Weekly support steady at 1763 backed by 1739- an area of interest for possible downside exhaustion IF reached and our broader bullish invalidation level.

Bottom line: The Gold price sell-off has marked near-term downside exhaustion off confluence support into the start of the month. From a trading standpoint, we’re on the lookout for evidence of a low in price – its either one more drop into 1739 to complete two-equal legs off the high (marking correction) OR a breach above 1909 to mark resumption. Note that December seasonals favor Gold strength and we’ll be looking for a break of the monthly opening-range for guidance.Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

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

Gold Trader Sentiment – XAU/USD Price Chart

Gold trader sentiment
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +4.13 (80.51% of traders are long) – typically bearishreading
  • Long positions are6.67% lower than yesterday and 12.89% lower from last week
  • Short positions are14.90% higher than yesterday and 19.60% 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 price trend may soon reverse higher despite the fact traders remain net-long.

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Previous Weekly Technical Charts

- Written by Michael Boutros, 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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