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Gold Price Outlook: XAU/USD Soars as Dollar Slumps- GLD Levels

Gold Price Outlook: XAU/USD Soars as Dollar Slumps- GLD Levels

Michael Boutros,
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Gold prices have rallied nearly 1% in just the first two days of December trade with XAU/USD rebounding off a confluence support region we’ve been tracking for months now. The recovery is approaching down-trend resistance and the focus is on a breakout of well-defined technical barriers for broader guidance. 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 gold price 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 noted that XAU/USD was, “responding to a key support zone here and the immediate focus is on this rebound.” The region in focus was 1451/56 - gold spent four weeks testing this zone with price surging higher into the open of December trade.

The advance remains within the confines of a descending channel formation extending off the yearly highs with confluence trendline resistance eyed around 1490s – look for a reaction there IF reached. We’ll reserve this threshold as our near-term bearish invalidation level with a close above needed to shift the focus back towards critical resistance at 1522/26. Key support steady at 1451/56 with a break / close below there needed to mark resumption towards the median-line (currently ~1426) and the 100% extension at 1420.

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

Bottom line: Gold is rebounding off major support with the advance still at risk while below channel resistance. From at trading standpoint, look for possible exhaustion heading into confluence resistance just shy of 1500 – a good spot to reduce long-exposure / raise protective stops IF reached. Ultimately, we’re looking for a break of the 1451-1490range for further guidance on our medium-term directional bias. 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 +3.41 (77.33% of traders are long) – bearishreading
  • Long positions are4.42% higher than yesterday and 10.61% higher from last week
  • Short positions are 4.10% higher than yesterday and 1.52% 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 further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian 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.