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Gold Price Forecast: Gold Bulls Face Uphill Climb- XAU/USD Levels

Gold Price Forecast: Gold Bulls Face Uphill Climb- XAU/USD Levels

Michael Boutros, Strategist

Gold Technical Price Forecast: XAU/USD Weekly Trade Levels

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Gold prices are attempting a third weekly advance with XAU/USD up more than 0.73% in early US trade on Monday. The rally is now approaching key resistance targets just higher – the first major test for the gold breakout and a possible turning point for the longer-term trend. These are the updated targets and invalidation levels that matter on the XAU/USD weekly technical chart. 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 to be on the “lookout for a breakout to offer guidance on the medium-term outlook. From a trading standpoint, the focus remains unchanged- pullbacks should be limited to 1738 IF price is heading higher with a weekly close above 1791 needed to fuel larger recovery.” Last week’s close was at 1792- ok so what now…

A re-work of the slope has identified a simple trendline off the late-May & 2020 lows (purple) – The 52-week moving average now converges on this slope around ~1805 and further highlights the technical significance of this resistance zone. A topside breach exposes the 61.8% Fibonacciretracement of the June decline at 1825 and the yearly high-week close at 1849- look for larger reaction there IF reached with a breach / close above needed to mark resumption of the broader uptrend in Gold. Initial weekly support rests back at the monthly open / 61.8% retracement of this advance at 1756/57 with broader bullish invalidation steady at 1738/47.

Bottom line: The gold rally is approaching some major resistance objectives and while the broader focus does remain higher, we’re looking for possible inflection off one of these zones. From a trading standpoint, the risk for near-term exhaustion up here- losses should be limited to the monthly open IF price is indeed heading higher with a close above 1849 ultimately needed to fuel the next leg higher in price. Keep in mind there is a flurry of central bank interest rate decision on tap this week from the BoC, BoJ and the ECB ahead of key inflation data out of the US with the Core Personal Consumption Expenditure (PCE) slated for Friday. 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 Technica Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.20 (76.21% of traders are long) – typically bearishreading
  • Long positions are8.94% higher than yesterday and 6.39% lower from last week
  • Short positions are 11.15% higher than yesterday and 9.80% 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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Key Data Releases This Week- Economic Calendar

Key Data Releases This Week- Economic Calendar - ECB BOJ BOC and US Inflation (PCE)

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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