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Gold Price Outlook: Gold Breakout Underway– XAU/USD Levels

Gold Price Outlook: Gold Breakout Underway– XAU/USD Levels

Michael Boutros, Strategist

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

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Gold prices surged more than 6.2% off the November lows, with a major breakout in XAU/USD already testing initial resistance targets. The advance comes on the heels of this week’s hot US inflation data, which saw US CPI surge to thirty-year highs. We’re looking for possible inflection here near-term with the broader outlook weighted to the topside while above the July / September highs. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into the close of the week. 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 highlighted the risk for, “near-term exhaustion within the broader uptrend into the November open. From a trading standpoint, be on the lookout for a low ahead of the lower parallels with a topside breach / close above 1809 needed to fuel the next leg towards key resistance closer to 1830.” Gold plunged more than 1.3% into the November open before reversing sharply higher just ahead of the lower parallels- the subsequent rally is now attempting sixth consecutive daily advance with XAU/USD testing resistance again today at the 78.6% Fibonacci retracement of the June decline at 1865.

Gold Price Chart - XAU/USD 240min

Gold Price Chart - XAU/USD 240min - GLD Trade Outlook - GC Technical Forecast

Notes: A closer look at Gold price action shows XAU/USD trading into the upper parallel of an ascending channel formation extending off the September lows. The immediate advance may be vulnerable here into uptrend resistance but the broader focus remains constructive while above the 61.8% retracement of the June decline / the July high-day close at 1825/29. A topside breach / close above the upper parallel is needed to mark resumption towards subsequent resistance objectives at the yearly open at 1898 and a critical confluence at the yearly high-day close / 2011 high / 61.8% retracement of the 2020 decline at 1918/23- look for a larger reaction there IF reached.

Bottom line: The immediate Gold rally may be vulnerable here into uptrend resistance. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops – look for an exhaustion low ahead of 1825 with a breach of the highs likely to fuel another accelerated run toward the yearly open. 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 +2.05 (67.19% of traders are long) – typically bearishreading
  • Long positions are1.97% higher than yesterday and 13.86% lower from last week
  • Short positions are19.18% lower than yesterday and 31.29% 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. 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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