Gold Price Forecast: XAU/USD Breakout Imminent- Bulls Beware

Gold Technical Forecast: XAU/USD Weekly Trade Levels

• Gold in consolidation just above uptrend support after registering record highs in May
• XAU/USD threat remains for deeper correction within yearly uptrend- PCE on tap
• Resistance 2334, 2414/31, 2516 – Support ~2300, 2253/60, 2146/55(key)

Gold is up fractionally this week with XAU/USD continuing to consolidate just above slope support. The focus now falls on the close of the month / quarter with key US inflation data on tap tomorrow. These are the update targets and invalidation levels that matter on the XAU/USD weekly technical chart heading the July 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, “reversed off uptrend resistance and remains at risk for a deeper correction towards trend support. From a trading standpoint, we’ll be on the lookout for an exhaustion low in the weeks ahead…” Gold fell another 2% in the following weeks with price riding support at the 75% parallel for the last four-weeks. The immediate focus is on breakout (weekly close) of the 2300-2334 range for near-term guidance here with the threat of a larger bull-market correction still looming.

Technical support rests just lower at the 23.6% retracement of the 2022 advance / 38.2% retracement of the yearly range at 2253/60. A break / weekly close below this threshold would suggest a larger correction is underway towards the median-line with the next major lateral levels seen at the 2023 high / 61.8% Fibonacci retracement at 2146/55 and the 2020 high / May 2023 high at 2075/81- both levels of interest for possible downside exhaustion IF reached.

Key resistance remains unchanged at the record high-close / April highs around 2414/31 with a breach / weekly close above the upper parallel (blue) needed to mark uptrend resumption. Subsequent resistance objectives eyed at the 1.618% extension of the October rally at 2516 and the 1.618% extension of the broader 2022 advance at 2565.

Bottom line: Gold prices have been in consolidation just above the 75% parallel for the past month and while the broader outlook is still constructive, the threat of a larger pullback remains after last month’s reversal off uptrend resistance. From a trading standpoint, we’re on the lookout for a possible exhaustion low in the weeks ahead. For now, the immediate focus is on a breakout of the 2300-2333 range- losses should be limited to the median-line for the October uptrend to remain viable with a close above 2431 needed to mark uptrend resumption.

Keep in mind that we are heading into close of the month / quarter with PCE slated of tomorrow and Non-Farm Payrolls (NFP) on tap next week- stay nimble into the monthly cross and watch the weekly closes for guidance here. I’ll publish an updated Gold Short-term Outlook once we get further clarity on the near-term XAU/USD technical trade levels.

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

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