Gold Short-term Outlook: XAU/USD Slides into Support- Breakout Looms

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

• Gold plunges nearly 5.5% off record high – now testing uptrend support
• XAU/USD Weekly / monthly opening-range breakouts pending- NFP, CPI, Fed on tap
• Resistance 2354, 2398, 1426/31 (key) – Support 2314, 2277/86 (key), 2228

Gold prices plummeted 5.48% off the record highs registered last month with XAU/USD now testing longer-term trend support. The focus is on a breakout of the weekly / monthly opening-ranges as we head into major event risk early in the month. 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, “A rebound off trend support is now approaching near-term, downtrend resistance with the May opening-range set just below- look to the breakout for guidance in the days ahead. From a trading standpoint, losses should be limited to the median-line IF price is heading higher on this stretch…” XAU/USD broke higher the following day with a rally of more than 7.5% off the May lows registering an intraday high at 2450 on May 20^th before reversing sharply lower. The focus is on this pullback with gold at risk for a larger correction while below 2400.

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 shows XAU/USD trading within the confines of a proposed descending pitchfork formation extending off the April / May highs. The weekly opening-range is set just above the median-line and the immediate focus is on a breakout for guidance here.

Initial support rests with the 78.6% retracement of the May range at 2314 and is backed the May low / open at 2277/86- look for a larger reaction there IF reached with a break / close below needed to suggest a larger correction is underway towards the April lows at 2228.

The weekly opening-range high (ORH) stands at 2354 with key resistance now eyed the 61.8% Fibonacci retracement of the May decline at 2398. Ultimately, a close back above the record high-day close / April highs at 2426/31 is needed to mark uptrend resumption with the next longer-term objective eyed at the 1.618% extension of the 2023 advance at 2516.

Bottom line: Gold has set the weekly opening-range low just above support with XAU/USD risking further losses while within this formation. Be on the lookout for a possible exhaustion low in the weeks ahead. From at trading standpoint, rallies should be limited to Friday’s highs IF price is heading lower on this stretch with a close below the median-line needed to fuel the next leg.

Keep in mind we are just setting the June opening-range with major event risk on tap early in the month (NFP Friday, US CPI, Fed rate decision next week). Stay nimble into the releases and watch the weekly closes here for guidance. 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