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Gold Price Forecast: XAU/USD Support Rebound to Face FOMC- GLD Levels

Gold Price Forecast: XAU/USD Support Rebound to Face FOMC- GLD Levels

2019-12-11 16:00:00
Michael Boutros, Strategist
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Gold prices are carving out a well-defined December opening-range just above key long-term support and the stage is set heading into today’s FOMC interest rate decision. These are the updated targets and invalidation levels that matter on the XAU/USD charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Price Chart - XAU/USD Daily

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

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

Technical Outlook: In my latest Gold Price Outlook we noted that XAU/USD had continued trade within a long-term support zone at, “the 1451-1461 range with the short-bias vulnerable while above the monthly (November) opening-range lows.” Nearly two weeks later and price has continued to hold above this threshold with the December opening-range taking shape just above.

Critical daily support steady at the 1451 confluence zone- a break / close below this threshold would is needed to keep the short-bias viable with such a scenario exposing August 2013 swing high / 25% parallel at 1433. Initial resistance stands at the October low-day close at 1479 backed by the upper parallel / 61.8% retracement at 1489 – a close above this threshold would validate a breakout and shift the focus back t the long-side in gold.

Gold Price Chart - XAU/USD 120min

Gold Price Chart - XAU/USD 120min - GLD Trade Outlook - Technical Forecast

Notes: A closer look at gold price action shows XAU/USD trading within the confines an a modified ascending pitchfork formation extending off the November lows with bullion looking to challenge the median-line ahead of today’s FOMC interest rate decision. A breach above the highlighted trendline confluence (near ~1470) would expose a larger recovery towards 1474 and the late-Novembers swing high / 75% parallel at 1478. Subsequent resistance objectives are stacked up just higher at 1483 and the highlighted slope confluence around 1486 – Ultimately, a breach / close above 1489 is needed to suggest a more significant low was registered last month.

Initial support rests at 1460/61 with a break below the weekly range lows exposing the lower parallel – look for a reaction there IF reached. At the end of the day, weakness beyond 1451 would risk another leg lower in gold prices targeting 1433.

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Bottom line: Gold prices are rebounding off long-term support here and the immediate focus on this recovery. From a trading standpoint, we’ll favor fading weakness while within this formation with a breach above 1489 needed to validate a breakout of the multi-month downtrend. Use caution heading into today’s Fed interest rate decision- IF fails on stretch higher here, a break beyond 1451 could see things accelerate quickly. Review my latest Gold Price Weekly Outlook for a closer look at the longer-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 - 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 +2.98 (74.90% of traders are long) – bearishreading
  • Long positions are5.76% lower than yesterday and 7.52% higher from last week
  • Short positions are 14.83% higher than yesterday and 6.75% 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. 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 Gold trading bias from a sentiment standpoint.
Gold BEARISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 12% -11% 3%
Weekly 7% 6% 6%
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- 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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