Gold Price Forecast: XAU/USD Rally Signals Exhaustion- Bulls On Guard

Gold Technical Forecast: XAU/USD Weekly Trade Levels

• Gold rally halted at uptrend resistance- snaps five-week winning streak
• XAU/USD bulls vulnerable to uptrend correction- FOMC rate decision, NFPs on tap
• Resistance 2391, 2431, 2516 – Support ~2300, 2238/60, 2146/55 (key)

Gold prices snapped a five-week winning streak with XAU/USD off more than 2.2% ahead of the close on Friday. A reversal off uptrend resistance leaves broader advance vulnerable into the monthly crossover with the FOMC interest rate decision and Non-Farm Payrolls (NFP)s on tap next week. Battle lines drawn on the XAU/USD weekly technical chart heading into the May 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 last month’s Gold Weekly Price Forecast we noted that XAU/USD was testing uptrend resistance and that, “losses should be limited to 2131 IF price is heading higher on this stretch with a close above the upper parallel needed to fuel the next leg towards 2277.” The bulls never looked back with the rally extending for the next two-weeks, well past our final resistance objective at 2309. The advance ultimately exhausted into confluent resistance at the upper parallels mid-month and the immediate focus remains on this pullback. It’s worth nothing that weekly momentum reading remain in the overbought condition. . . for now. Bulls on guard.

Initial weekly support rests near ~2300 and is backed by the highlighted Fibonacci confluence at 2238/60. Broader bullish invalidation is now raised to 2146/55- a region defined by the 61.8% retracement of the yearly range and the objective 2023 swing high.

Initial weekly resistance is eye at the record high-close at 2391 with a breach / close above the record-high at 2431 needed to mark resumption of the broader uptrend. Subsequent resistance objectives eyed at the 1.618% extension of the October advance at 2516 and the 1.618% extension of the broader 2022 advance at 2565- look for a larger reaction there IF reached.  

Bottom line: Gold has responded to confluent uptrend resistance – while the broader outlook remains constructive, the risk of a deeper correction remains sub-2391. From a trading standpoint, we’re on the lookout for evidence of a possible exhaustion low in the weeks ahead– losses should be limited to 2238 IF price is heading higher on this stretch with a close above 2431 needed to mark resumption.

Keep in mind that we have major event risk on tap next week into the monthly open with the FOMC interest rate decision and NFPs on tap. Stay nimble into the May opening-range and watch the weekly closes 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

Follow Michael on X @MBForex