News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Gold Price Forecast: Gold Coils at Support - XAU/USD Breakout Imminent

Gold Price Forecast: Gold Coils at Support - XAU/USD Breakout Imminent

Michael Boutros, Strategist

Gold Technical Price Forecast: Neutral

Advertisement

Gold prices pressed higher this week with XAU/USD up more than 0.5% in early US trade on Friday. The advance keeps gold within the confines of a well-defined range just above long-term uptrend support. The medium-term outlook hinges on a breakout of this critical range heading into the second half of October. These are the updated targets and invalidation levels that matter on the XAU/USD weekly technical chart. 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 Chart

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

Notes: In my last Gold Weekly PriceOutlook we noted that the XAU/USD had, “failed a third attempt to close below key support at 1738/47 – the immediate focus once again is on possible inflection off this mark into the October open. From a trading standpoint, look for losses to be limited to this week’s low IF price is heading higher with a close above 1791 needed to fuel a larger recovery.” Gold respected a test of the lows with the subsequent rally faltering just above the 1791resistance confluence before pulling back- the battlelines are drawn heading into next week.

Key support remains with the 61.8% retracement of the August rally / April 2020 high at 1738/47- a break / close below this threshold would threaten another accelerated sell-off with such a scenario exposing critical support at 1670/82- a region define by the 61.8% Fibonacci extension of the 2020 decline, the 2021 yearly low and the broader 38.2% retracement of the late-2015 advance. A topside breach of this formation would shift the focus towards the 52-week moving average (currently ~1811) and the 61.8% retracement of the June decline at 1825. Ultimately a close above the yearly high-week close at 1849 is still needed to mark resumption of the broader uptrend in gold.

Bottom line: Gold has been testing the bounds of a critical range for the past five weeks and while the broader focus remains constructive, we’re on the lookout for a breakout to offer guidance on the medium-term outlook. From a trading standpoint, the focus remains unchanged- pullbacks should be limited to 1738 IF price is heading higher with a weekly close above 1791 needed to fuel larger recovery. Keep in mind there is a flurry of inflation data next week from New Zealand, UK, Eurozone, and Japan- stay nimble and respect a breakout of this range. A close below parallel support could see another accelerated bout of losses for the yellow metal. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trade 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 Price Forecast: Gold Coils at Support - XAU/USD Breakout Imminent
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.50 (71.42% of traders are long) – typically bearishreading
  • Long positions are1.44% lower than yesterday and 11.29% lower from last week
  • Short positions are7.88% lower than yesterday and 2.04% 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. Traders are more net-long than yesterday but less net-long from last week. The combination of current positioning and recent changes gives us a further mixed Gold trading bias from a sentiment standpoint.

---

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.

DISCLOSURES