Gold Forecast: Why XAU/USD Selling Could Accelerate if $2275 Gives Way

Gold Key Points

After-inflation interest rates remain one of the biggest factors driving the performance of gold.
The yellow metal is drifting down to the bottom of its broad 3-month range between $2275 and $2430.
A confirmed break below $2275 support would project a “measured move” objective for the pattern down around $2100

Sometimes, it’s not worth overcomplicating things.

While the (negative) correlation between real yields and gold has deteriorated in recent months, after-inflation interest rates remain one of the biggest factors driving the performance of the yellow metal.

With the benchmark US 10yr Treasury yield carving out a potential near-term bottom last week and rising to a two-week high today, gold accordingly topped out last week and has fallen to a two-week low. Now moving forward, the key level for bond and gold traders to watch will be the 4.31-2% level that has served as consistent support/resistance dating back to at least 2022. If yields can rally above that level, it could spur on another leg lower in gold prices.

Source: StoneX, TradingView

Gold Technical Analysis: XAU/USD Daily Chart

Source: StoneX, TradingView

Looking at gold specifically, the yellow metal is drifting down to the bottom of its broad 3-month range between $2275 and $2430. Many analysts have noted a potential Head-and-Shoulders top pattern at these elevated levels. For the uninitiated, this classic pattern shows a shift from an uptrend (higher highs and higher lows) to a downtrend (lower lows and lower highs) and often marks a significant top in the chart.

The pattern is typically confirmed by a break below the “neckline”; in this case, the neckline sits at the bottom of the range around $2275. A confirmed break below that support level would project a “measured move” objective for the pattern down around $2100, though as always, there is no guarantee that will necessarily play out as projected.

Regardless, bulls will want to see prices bounce from support in the upper-$2200s to keep the near-term bias from flipping to bearish heading into July.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor