Gold Short-term Outlook: XAU/USD Poised for CPI Breakout

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

• Gold recovery vulnerable into technical resistance ahead of US April CPI
• XAU/USD May opening-range breakout pending
• Resistance 2372/83 (key), 2431, 2516– Support 2316, 2283/86 (key), 2224/28

Gold prices rallied more than 4.2% month-to-date with XAU/USD setting the May opening-range just below technical resistance. The battle lines are drawn heading into tomorrow’s highly anticipated US inflation report. 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 the XAU/USD breakout was approaching uptrend resistance near ~2300 and that , “losses should be limited by 2180 IF gold is heading higher on this stretch with a weekly close above 2309 needed to fuel the next leg.” A shallow pullback of just 1.64% registered an intraday low at 2267 the following day before reversing sharply higher with the breakout registering fresh record highs at 2431 on April 12^th.

A correction of more than 6.3% off the highs rebounded off multi-month uptrend support early in the month with the rally faltering last week at confluent resistance. The May opening-range seems set here and we’re looking for a breakout of the 2283-2383 zone for guidance in the days ahead.

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 shows XAU/USD trading within the confines of a descending pitchfork formation extending off the record highs with upper parallel highlighting resistance at 2372/83- a region defined by the 61.8% Fibonacci retracement of the April decline and the record high-close (HC). The immediate focus is on a reaction off this mark with the multi-week advance vulnerable while below.

Look for initial support along this near-term channel (currently ~2330s) backed closely by the 61.8% retracement of the monthly-range at 2316 and the objective May-open / 61.8% extension of the April decline at 2283/86. A break / close below this threshold would shift the focus lower into the close of the month with subsequent support eyed at the 100% extension / April low at 2224/28.

A topside breach / close above this key pivot is needed to mark uptrend resumption with such a scenario exposing the record high at 2431 and the 1.618% extension of the October rally at 2516.

Bottom line: 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- ultimately, we’re looking for evidence of an exhaustion low with a breach / close above 2383 needed to mark uptrend resumption.

Keep in mind we get the release of US Consumer Price Index (CPI) with markets largely expecting a slight easing of inflationary pressures. That said, the event has the potential to charge some volatility here- stay nimble into the release and watch the weekly close for guidance. Review my latest Gold Weekly Technical Forecast for a closer look at the longer-term look at the XAU/USD trade levels.  

Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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

Follow Michael on X @MBForex