XAU/USD Defends Critical Support- GLD Targets


Gold prices reversed off a key support zone this week and we’re assessing this recent recovery in XAU/USD. While the broader risk remains lower, the short-bias is vulnerable while above 1451 and the immediate focus is on a reaction at near-term resistance just higher. These are the updated targets and invalidation levels that matter on the XAU/USD charts this week. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling price setup and more.

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Gold Price Chart – XAU/USD Daily

Gold Price Chart - XAU/USD Daily - GLD Trade Outlook - Technical Forecast

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

Technical Outlook: In my latest Gold Price Outlook we noted that XAU/USD was, “testing the lower bounds of a multi-week consolidation pattern and we’re looking for a reaction.” A decisive break lower later that day saw gold prices plummet into a critical long-term support zone we’ve been tracking for months now at 1451/61. Price has continued to respect this region on a close basis and leaves the short-bias at risk while above – for now.

Gold Price Chart – XAU/USD 240min

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

Notes: A closer look at gold price action shows XAU/USD trading within the confines a descending pitchfork formation extending off recent highs with the upper parallel highlighting near-term confluence resistance here at 1472 – where the October open converges on the 38.2% retracement of the November decline. A breach / close above this threshold would be needed to validate a near-term reversal with such a scenario targeting 1489.

Near-term support remains 1460/61 with a break / close below 1451 needed to suggest a much larger correction is underway in gold prices. Subsequent support objectives eyed at 1433 in event of the break.

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Bottom line: Gold prices have responded to key support with the recent recovery now targeting the first resistance target at 1472– look for a reaction here. From a trading standpoint, a good place to reduce long-exposure / raise protective stops – look for support around 1460 on pullbacks IF price is indeed heading higher with a breach targeting 1489. Review my latest Gold Price Weekly 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 Trade Outlook - Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.68 (78.65% of traders are long) – bearishreading
  • Long positions are0.73% lower than yesterday and 8.52% higher from last week
  • Short positions are 4.06% higher than yesterday and 18.38% 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. Yet traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Gold trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

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– Written by Michael Boutros, Currency Strategist with DailyFX

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