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Gold Price Technical Outlook: Gold War Bid Drives as Conflict Escalates

Gold Price Technical Outlook: Gold War Bid Drives as Conflict Escalates

Michael Boutros, Strategist

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

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Gold prices surged more than 2.5% since the start of the week with the XAU/USD rally attempting to mark a fifth consecutive weekly advance. Concerns over escalations in Russia’s invasion of Ukraine continues to fuel haven flows into the yellow metal with gold once again approaching key technical resistance just higher. Can the bulls clear this critical zone? These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into the March 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 Prices Outlook we noted that the XAU/USD rally was approaching, “initial resistance along the upper parallel (currently near ~1867) with a close above 1877 still needed to fuel the next leg higher in price towards the 2021 yearly open at 1899.” Gold ripped though these levels in the following days with the advance briefly extending past a key resistance zone at the 2021 high-close / 2021 high at 1950/59 before pulling back- the focus remains on a reaction off this mark with a breach / daily close above needed to fuel the next leg higher.

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 continuing to trade within the confines of the ascending channel formation off the February lows with a breach of the weekly opening-range high today threatening another run at the highs. Initial resistance eyed at the 61.8% Fibonacci retracement at 1937 with a breach above 1950/59 needed to keep the long-bias viable towards . Weekly open support rests at 1889 with a break below 1877 needed to suggest a more significant near-term high is in place.

Bottom line: The gold rally is approaching a key resistance range for the second time here and while the broader outlook remains constructive, the immediate advance may be vulnerable. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards 1950/59- losses should be limited to the weekly open IF price is heading higher on this stretch. Keep in mind prices are just now carving the March opening-range with US non-farm employment (NFP) still on tap- stay nimble! 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 +2.59 (72.15% of traders are long) – typically bearishreading
  • Long positions are1.39% lower than yesterday and 3.19% higher from last week
  • Short positions are6.53% higher than yesterday and 24.66% 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 less net-long than yesterday but more net-long from last week. The combination of current position 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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