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Gold Price Outlook: XAU/USD Technical Breakout Eyes 2011 Record Highs

Gold Price Outlook: XAU/USD Technical Breakout Eyes 2011 Record Highs

Michael Boutros, Strategist

Gold Technical Price Outlook: XAU/USD Near-term Trade Levels

Gold prices are soaring for a seventh consecutive week with XAU/USD up more than 2.7% since the Sunday open. A breach above July opening-range take price towards near-term uptrend resistance and while the immediate rally may be vulnerable here, the broader focus remains constructive while within this technical formation. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts in the days ahead. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold trade setup and more.

Gold Price Chart - XAU/USD Daily

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

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

Technical Outlook: In my last Gold Price Outlook we noted to be on the lookout, “for downside exhaustion ahead of 1779 (July open) on pullbacks IF price is indeed heading higher with a breach above 1820 needed to fuel the next leg higher in price.” XAU/USD registered a low at 1790 in the following days before reversing sharply higher with gold marking a daily close above 1820 on an accelerated breakout yesterday.

The focus is on immediate resistance objectives here at the record high-week close at 1856 and the 2011 high-day close at 1874- a breach / close above this threshold is needed to keep the immediate advance viable towards the 2011 record stretch high at 1920. Daily support rests back at 88.6% Fibonacci retracement at 1820 with bullish invalidation now raised to the 2012 high at 1795.

Gold Price Chart - XAU/USD 120min

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

Notes: A closer look at Gold price action sees XAU/USD continuing to trade within the confines of an ascending pitchfork formation extending off the June lows with the rally testing resistance at the upper parallel in Asia trade last night. Risk for topside exhaustion into this zone but the advance remains constructive while above the median-line (currently ~1840s) with a breach / close above 1874 needed to fuel the next leg higher in price. Key near-term support rests at 1817/20 with a break below the weekly open at 1805 needed to suggest a larger-scale correction is underway.

Bottom line: The gold price has extended into a zone that could interrupt the immediate advance at uptrend resistance– that said the focus is higher while above the median-line. From at trading standpoint, look to reduce long-exposure / raise protective stops on a test of 1874- look for a larger reaction there IF reached. Ultimately a pullback off this slope may offer more favorable opportunities closer to uptrend support with a breach of this formation exposing the record highs. Review my latest Gold Weekly Price 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 - GC Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.09 (67.60% of traders are long) – bearishreading
  • Long positions are5.89% lower than yesterday and 0.60% higher from last week
  • Short positions are 8.97% lower than yesterday and 5.34% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may 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.

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- Written by Michael Boutros, Technical 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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