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Gold Price Outlook: XAU/USD Rolling Over Through Support

Gold Price Outlook: XAU/USD Rolling Over Through Support

Paul Robinson, Strategist

Gold/Silver Price Technical Outlook

  • Gold is quickly losing its bullish appeal as support comes under siege
  • Silver stuck in a range, consolidating or rolling over? Levels to watch
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Gold Price Outlook: XAU/USD Rolling Over Through Support

Gold was looking good last week, holding above support with a couple of rejections to help fortify the area around 1860/70, but as the new week begins the bullish outlook is being put to the test. Perhaps today we see another reversal that puts in another rejection of lower prices.

However, if gold doesn’t hold and today’s losses maintain as they are currently (-1.35%) or worsen, then the best case scenario appears to be a bull-flag. But that is just a potential as much work is yet needed before it can become a serious consideration.

The risk on a break of horizontal support and the March trend-line is that we are seeing a broader decline develop. The first level up to watch is the 200-day at 1839, an unproven but potentially big source of support. It could keep the bull-flag scenario in play should it hold and help boost gold higher.

From a tactical standpoint, things are a bit tricky here. If gold closes below support today, then longs with short-term objectives may want to exercise caution until price action firms up. For would-be bears, the outlook is turning slightly more favorable at this juncture, but with the 200-day so close risk/reward on new entries doesn’t appear too appealing.

Gold Daily Chart

gold daily chart

Gold Chart by TradingView

Silver continues to struggle with the 28s, an area of resistance that dates to August. There is support not too far away around 27.40/20 that has silver building a range. It isn’t encouraging that recently the March to early June channel was broken, but if price can hold onto the range then at some point we might see it turn into a consolidation that leads to an upside breakout.

If gold is to weaken here, now is a good time for silver to show relative strength and hold the range for such a breakout to develop later. But a breakdown below 27.20 will have silver out of the range on the downside and looking towards the March 2020 trend-line.

For now, waiting for a resolution of the range looks to be the most prudent action to take. Doing nothing is doing something.

Silver Daily Chart

silver daily chart

Silver Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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