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Gold Price Outlook: Gold Surges From Yearly Low- XAU/USD Levels

Gold Price Outlook: Gold Surges From Yearly Low- XAU/USD Levels

Michael Boutros, Strategist

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

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Gold prices have soared nearly 7% off the lows after XAU/USD rebounded off critical support at the yearly lows last week. The rally is extending into initial resistance targets and while the focus remains higher, the advance may be vulnerable near-term into these next objectives. 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 my last Gold Price Outlook we noted that XAU/USD was, “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.” Gold registered a high at 1831 the following day before reversing sharply with a break below support at 1795/99 exposing a decline of nearly 7% - price briefly marked a low into critical support at the yearly lows before reversing sharply – is a low in place?

Initial resistance now stands at the sliding parallel (basically today’s high) backed by key technical levels at the 2012 high/ 78.6% Fibonacci retracement at 1795/99, the 100-day moving average at 1805 and the objective monthly open at 1814. Broader bearish invalidation now lowered to the 61.8% retracement / July high-day close at 1825/29 - Ultimately, a breach / close above is needed to mark resumption of the broader uptrend.

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 ascending pitchfork formation with the median-line further highlighting near-term resistance into 1795/99- Initial support rests with the lower parallel / weekly opening-range low at 1770 backed by the June low-day close at 1760- both levels of interest for a possible exhaustion low IF reached. A break / close below the August low-day close at 1730 would ultimately risk another run at the lows.

Bottom line: Gold defended critical support at the yearly lows last week and the focus is on this subsequent recovery. From at trading standpoint, look for pullbacks to be limited to the 1760 IF price is heading higher on this stretch with a close above 1830 needed to shift the broader focus higher. 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 +2.56 (71.90% of traders are long) – typically bearishreading
  • Long positions are0.36% higher than yesterday and 4.97% lower from last week
  • Short positions are9.18% higher than yesterday and 3.49% 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

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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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