Gold Price Forecast: XAU/USD Battle Lines Drawn Ahead of FOMC, NFP

Gold Technical Forecast: XAU/USD Weekly Trade Levels

• Gold down more than 1.4% in January– monthly range preserved into the close
• XAU/USD risk for near-term weakness remains- broader outlook still constructive
• Major event risk into the monthly cross with FOMC / NFPs on tap
• Resistance 2055, 2075/81 (key), 2130 – Support 2004, 1960/75, 1935/43 (key)

Gold has remained under pressure since the start of the year with a pullback off technical resistance leaving the door open to a deeper correction in price. That said, we are on the lookout for a breakout of the January range for guidance with the battle lines drawn heading into the FOMC rate decision and US Non-Farm Payrolls later this week. These are the updated targets and invalidation levels that matter on the XAU/USD weekly technical chart into the February open.

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Gold Price Chart – XAU/USD Weekly

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

Technical Outlook: In my last Gold Weekly Price Forecast we noted that XAU/USD had, “failed to mark a weekly close above key technical resistance and while the broader outlook remains constructive, the advance may be vulnerable here into the start of the year.” The resistance zone in focus was 2075/81- a region defined by the 2020 swing high and the 2023 record high. Gold plunged more than 3.3% off that mark into the January open with price rebounding off support at the record high-week close (HWC) at 2004.

The immediate focus now shifts to a breakout of the January range with the broader technical outlook still constructive while above the 52-week moving average / 50% retracement of the 2023 range at 1960/75 (bullish invalidation). Ultimately, a break / weekly-close below 1935/43 would be needed to suggest a larger trend reversal is underway.

Look for initial resistance near 2055 (61.8% Fibonacci retracement of this decline- not depicted) with a breach / weekly-close above 2075/81 still needed to mark uptrend resumption. Subsequent resistance objectives are eyed at the 100% extension of the October rally at 2130 and the 100% extension of the 2022 advance at 2151.

Bottom line: Gold has set the January range just below confluent resistance and the focus is on a breakout for guidance. From at trading standpoint, we are looking to confirm an exhaustion low – losses should be limited by 1960 for the October advance to remains viable with a breach / close above 2081 needed to fuel the next leg higher in price. Keep in mind the FOMC interest rate decision is on tap tomorrow with US non-farm payrolls (NFPs) slated for Friday- stay nimble into the releases and watch the weekly closes here. Review my latest Gold Short-term Outlook for a closer look at the short-term XAU/USD technical trade levels.

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

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