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Gold Price Outlook: XAU/USD Plunges into Critical Support- GLD Levels

Gold Price Outlook: XAU/USD Plunges into Critical Support- GLD Levels

Michael Boutros,
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Gold prices marked the largest single-week loss since November of 2016 last week with XAU/USD plummeting nearly 3.7%. The decline takes gold prices into a critical support pivot we’ve been targeting for months now and we’re looking for a reaction here this week. These are the updated targets and invalidation levels that matter on the XAU/USD weekly chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this setup and more.

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Gold Price Chart - XAU/USD Weekly

Gold Price Chart - XAU/USD Weekly - GLD Trade Outlook - Technical Forecast

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

Notes: In my last Gold Price Weekly Outlook we cited, “a more neutral stance” heading into the start of November trade while noting that another, “washout lower” was favored with key support eyed at 1451/61 – XAU/USD is testing this critical support pivot this week and the focus is on a close in relation to this region.

A weekly close below this threshold would expose the median-line / 100% extension of the September decline at 1420 backed by the 38.2% retracement at 1405- both areas of interest for possible downside exhaustion. Initial weekly resistance stands at the highlighted trendline confluence around ~1490 – look for a reaction on recoveries IF reached.

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

Bottom line: The gold price plunge is testing the first major hurdle and the immediate focus is on key support at 1451/61 with the short-bias vulnerable while above this threshold. From a trading standpoint, a good spot to reduce short-exposure / lower protective stops. Be on the lookout for downside exhaustion / possible long-entries for a recovery IF price can hold this zone into the close of the week- ultimately, the broader risk remains for further losses while below 1490. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

Gold Trader Sentiment - XAU/USD Price Chart

Gold Trader Sentiment - XAU/USD Price Chart - GLD Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.01 (75.04% of traders are long) – bearishreading
  • Long positions are10.61% lower than yesterday and 25.61% higher from last week
  • Short positions are 19.96% higher than yesterday and 26.25% lower 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 but more net-long from last week. For now, the combination of current positioning and recent changes gives us a further mixed 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.