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Gold Price Outlook: Gold August Battle Lines Drawn- XAU/USD Levels

Gold Price Outlook: Gold August Battle Lines Drawn- XAU/USD Levels

Michael Boutros, Strategist

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

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Gold prices are fractionally lower into the start of the weekly with XAU/USD off 0.2% to trade at 1810 in New York trade on Tuesday. While the broader outlook remains constructive, the risk for a deeper correction is more prominent after a second failed attempt to breach technical resistance. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into the August open. 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

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

Technical Outlook: In last month’s Gold Price Outlook we noted that XAU/USD rally had extended into resistance, “at the 61.8% Fibonacci extension of the late-June advance / 50% retracement of the June decline at 1833- risk for near-term inflection here.” Bullion dropped more than 2.4% off that mark in the following weeks before defending confluence support at the lower parallel / 2012 high at 1795 into the close of July. That recovery has once again failed at the 1833 resistance zone and a breach / close above the 61.8% extension at 1841 is still needed to fuel the next leg higher in price.

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 shows XAU/USD trading within a proposed descending pitchfork formation extending off the July highs with the weekly / monthly opening-range taking shape just above initial support here at the 61.8% retracement late-July advance at 1806. Initial resistance stands at the upper parallel / 61.8% retracement at 1822 with a break lower from here again exposing 1795 and the 61.8% retracement of the June advance at 1782- both zones of interest for possible downside exhaustion IF reached.

Bottom line: Gold is carving out the weekly / monthly opening-range just above long-term uptrend support. From at trading standpoint, the immediate focus is on a break of the 1795-1833 range for guidance with the threat for a deeper correction while below 1841. Ultimately a larger setback may offer more favorable entries with a breach / close above yearly trendline resistance needed to mark resumption of the broader uptrend. Keep in mind US Non-Farm Payrolls (NFP) are on tap into the close of the week- stay nimble here. 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 Outlook
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +4.60 (82.15% of traders are long) – typically bearishreading
  • Long positions are3.45% higher than yesterday and 4.11% lower from last week
  • Short positions are3.21% lower than yesterday and 0.08% 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 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 from 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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