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Gold Price Outlook: Gold Breakout Imminent – XAU/USD Levels for NFP

Gold Price Outlook: Gold Breakout Imminent – XAU/USD Levels for NFP

Michael Boutros, Strategist

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

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Gold prices rallied more than 1% into the start of the month and while the broader outlook remains constructive, the immediate rally may be vulnerable as the focus shifts to a multi-week range as we head into major US event risk tomorrow. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into Non-Farm Payrolls. Review my latest Strategy Webinar for an in-depth breakdown of this gold technical setup and more.

Gold Price Chart - XAU/USD Daily

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

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

Technical Outlook: In last month’s Gold Price Outlook we noted that the XAU/USD, “rally may be vulnerable here into confluent technical resistance” as price probed into the upper parallels in late-April. Resistance held at the 2012 swing high at 1795 with this threshold now marking the weekly / monthly opening-range highs. Just higher rests the 100% extension of the March advance at 1804 – both levels of interest for possible inflection IF reached. Daily support steady at the 1764/67 Fibonacci confluence with a break below pitchfork support needed to suggest a larger reversal is underway.

Gold Price Chart - XAU/USD 120min

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

Notes: A closer look at Gold price action shows XAU/USD carving a well-defined weekly opening-range between 1763-1795, a zone that has governed gold prices since April 16th – we’re on breakout watch. A breach / close above 1804 would be needed fuel the next leg higher with such a scenario exposing subsequent resistance objectives at 1818 and the February open / 61.8% retracement at 1848/51. A break lower would risk a larger correction towards 1752 with near-term bullish invalidation now raise to the March high-close / lower parallel at ~1745- an area of interest for possible downside exhaustion IF reached.

Bottom line: Gold prices continue to trade within a well-defined range just below resistance heading into US Non-Farm Payrolls tomorrow. From at trading standpoint, the focus is on a breakout of the 1763-1804 level for guidance with the broader rally vulnerable while below the upper bounds – be on the lookout for a possible exhaustion high tomorrow with a broader setback likely to offer more favorable opportunities closer to trend support. Ultimately, a close above the upper parallel is needed to fuel the next accelerate leg higher in price- stay nimble into the close of the week. 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 Retail Positioning - GC Technical Forecast - NFP Levels
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +4.33 (81.24% of traders are long) – typically bearishreading
  • Long positions are0.77% higher than yesterday and 6.67% lower from last week
  • Short positions are8.69% lower than yesterday and 2.14% 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. Trader are more net-long than yesterday but less net-long from last week. The combination of current positioning and recent changes gives us a further mixed Gold trading bias a sentiment standpoint.

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Active Technical Setups

- 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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