Gold Short-term Outlook: XAU/USD Begins Descent

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

• Gold rallies to fresh record high- exhausts into uptrend resistance
• XAU/USD risk for some pullback- broader outlook remains constructive
• Resistance 2180, ~2220s, 2277 – Support 2146, 2114, 2064/75 (key)

Gold is on the defensive after a three-week rally of more than 9% stretched into technical resistance at fresh record highs. While the broader outlook remains weighted to the topside, the immediate advance may be vulnerable after last week’s test if the uptrend and we’re on the lookout for a possible exhaustion low within this formation in the days ahead. These are the updated targets and invalidation levels that matter on the XAU/USD short-term technical charts.

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Gold Price Chart – XAU/USD Daily

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

Technical Outlook: In last month’s Gold Short-term Price Outlook we noted that XAU/USD was approaching resistance and that, “losses should be limited to the 2004 IF price is heading higher on this stretch with a breach / close above 2050 needed to invalidate the December downtrend.” Resistance held into the close of February with a massive breakout on March 1 fueling a nine-day rally of more than 10.6% off the yearly low. The last time gold marked a nine-day rally was July 2020, just weeks before the record high was registered.

The advance faltered into uptrend resistance last  week at the 61.8% Fibonacci extension of the October rally at 2180. Price has been in consolidation over the past few days and the immediate focus is on a near-term breakout here.

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 highlights the explosive breakout with XAU/USD trading within the confines of an ascending pitchfork formation extending off the February low. Price has been testing support along the median-line since the start of the week and the immediate focus is on a breakout of the weekly opening-range for guidance.

A break below the 2023 high at 2146 would threaten a deeper correction within the multi-week uptrend towards the 38.2% retracement of the yearly rage at 2114- look for a larger reaction there If reached. Broader bullish invalidation now raised to the 61.8% retracement / 2020 swing high at 2065/75.

A topside breach / weekly close above 2180 is needed mark uptrend resumption with subsequent resistance objectives eyed at the highlighted slope confluence near ~2220s and the 100% Extension of the broader 2022 advance at 2277.

Bottom line: Gold has responded to uptrend resistance and may be vulnerable to some back-and-fill here. That said, the trade remains constructive while within this formation. From a trading standpoint, losses should be limited to 2114 IF price is heading higher on this stretch with a close above 2180 needed to fuel the next leg in price.

Note that the FOMC interest rate decision is on tap next week where we get the updated economic projections as they pertain to growth, inflation, and employment. As always, the dot-plot will be especially scrutinized as markets assess the likelihood of lower rate this year. Stay nimble into the release and watch the weekly closes here. Review my latest Gold Weekly Technical Forecast for a closer look at the longer-term look at the XAU/USD trade levels.  

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

Follow Michael on X @MBForex