Gold Short-term Outlook: XAU/USD Recovery Eyes Pivotal Resistance

Gold Technical Outlook: XAU/USD Short-term Trade Levels

Gold price recovery poised to mark fourth-daily advance- up nearly 5.4% off monthly low
XAU/USD rebound approaching downtrend resistance- risk for exhaustion / price inflection ahead
Resistance 2663/72, 2693 (key), 2735/43- Support 2594-2602 (key), 2563, 2531/33

Gold prices surged more than 4.3% since the start of the week with a four-day rally now threatening the late-October downtrend. Battle lines drawn on the XAU/USD short-term technical charts.

Gold Price Chart – XAU/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; XAU/USD on TradingView

Technical Outlook: In my last Gold Short-term Price Outlook we noted that XAU/USD had was threatening the August rally with the, “medium-term threat for a larger correction with the broader uptrend. From a trading standpoint, rallies would need to be limited to the monthly open IF price is heading lower on this stretch with a close below 2672 needed to keep the immediate short-bias viable.” Gold broke lower days later with the post-election sell-off plunging more than 9% off the October / record high.

Gold registered an intraday low last week just ahead of highlighted support at August high / 50% retracement of the May rally near 2531/33. The subsequent rebound is now poised to mark fourth-consecutive daily advance with gold now within striking distance of key resistance.

Gold Price Chart – XAU/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; XAU/USD on TradingView

Notes: A closer look at gold price action shows XAU/USD continuing to trade within the confines of a descending pitchfork we’ve been tracking off the October high. Note that the 1.382% extension of this slope caught the lows last week with the inverse extension now converging on key Fibonacci resistance just higher.

Initial resistance is being tested today at the 50% retracement of the late-October decline / September high-day close (HDC) at 2663/72 with near-term bearish invalidation now lowered to the 61.8% retracement at 2693- a breach / close above this threshold would suggest a more significant low was registered last week / invalidate the multi-week downtrend. Subsequent resistance objectives eyed at the 78.6% retracement / record HDC / November open at 2735/44 and 2787-2804.

Initial support rests with the 38.2% retracement / October low at 2594-2602 and is backed by the objective weekly open at 2563. A break below this level would threaten downtrend resumption towards 2531/33- look for a larger reaction there again IF reached. The next major support zone comes in at 2469/83- a region defined by the July high-close, the 61.8% retracement, and the July swing high (area of interest for possible downside exhaustion / price inflection IF reached).

Bottom line: A recovery off downtrend support is now approaching downtrend resistance- risk for price inflection here. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 2594 IF price is heading for a breakout with a close above 2693 needed to suggest a low is in place.

Keep in mind we get the release of key US inflation data next week ahead of the monthly cross. Stay nimble into the releases and watch the weekly closes here for guidance. Review my latest Gold Weekly Technical Forecast for a closer look at the longer-term look at the XAU/USD trade levels.

Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.