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Gold Price Forecast: Gold Recovery on the Ropes- XAU/USD Bears Await

Gold Price Forecast: Gold Recovery on the Ropes- XAU/USD Bears Await

Michael Boutros, Strategist

Gold Technical Price Outlook: XAU/USD Weekly Trade Levels

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Gold prices are down nearly 1% since the start of the week with XAU/USD attempting to snap a two-week rally off technical support. Although further upside may still be likely near-term, the recovery remains vulnerable while below broader downtrend resistance. These are the updated targets and invalidation levels that matter on the gold weekly charts into the close of the month. 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 Price Chart - XAU/USD Weekly - GLD Trade Outlook - GC Technical Forecast

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

Notes: In my last Gold Weekly PriceOutlook we noted that the XAU/USD, “breakdown has now responded to the first major hurdle at confluence Fibonacci support. From at trading standpoint, look for topside exhaustion ahead if 1767 IF price is indeed heading lower…” An early-month rebound yielded a rally of nearly 4.7% with gold registering a high at 1755 before exhausting last week. Was that just a relief rally?

Key support remains unchanged at 1682/89 backed by the 100% extension of the August decline at 1649 – note that this region converges on multiple trendlines and is an area of interest for possible downside exhaustion IF reached. Resistance remains at the 50% retracement of the 2020 range / 61.8% extension at 1763/67 with broader bearish invalidation unchanged at the highlighted slope confluence around ~1800.

Bottom line: A rebound off key lateral support leaves gold mid-range here and in a precarious position into the close of the month. From a trading standpoint, our outlook remains unchanged and we’re on the lookout for a possible exhaustion high ahead of 1767. Ultimately a break of the lows would be needed to mark resumption towards more significant uptrend support – look for a larger reaction there IF reached. 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 Trader Sentiment - XAU/USD Price Chart - GLD Retail Positioning - GC Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +5.0 (83.33% of traders are long) – typically bearishreading
  • Long positions are0.50% higher than yesterday and 2.81% lower from last week
  • Short positions are9.26% lower than yesterday and 3.02% 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 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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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.

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