Gold Short-term Technical Outlook: XAU/USD Bulls Eye 2600

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

• Gold breaches September opening- rallies more than 3.6% month-to-date
• XAU/USD approaching up trend resistance- risk for exhaustion / price inflection- Fed on tap
• Resistance 2643/71 (key), 2743, 2804- Support 2565, 2524 (key), 2469/83

Gold prices are virtually unchanged since the Sunday open with XAU/USD trading at 2578 ahead of tomorrow’s highly anticipated Fed interest rate decision. While a breakout of the monthly opening-range does keep the focus higher, the advance is now approaching near-term uptrend resistance and we’re looking for possible price inflection off these levels in the days ahead. Battle lines drawn on the XAU/USD short-term technical charts heading into FOMC.

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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 my last Gold Short-term Price Outlook we noted XAU/USD had, “turned from uptrend resistance with the pullback off record highs now testing initial trend support. From a trading standpoint, the focus is on a reaction off this mark- losses should be limited to 2469 IF price is heading higher on this stretch with a breach above 2524 needed to mark uptrend resumption.” Gold registered an intraday low at 2471 that day before rebounding with a breakout of the September opening-range fueling a rally of more than 4.7% off the monthly low.

The rally has extended into multi-month channel resistance with the FOMC interest rate decision on tap tomorrow. The focus is on a reaction up here with the immediate advance vulnerable while below the July slope.

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 an ascending pitchfork extending off the June low with an embedded channel highlighting the recent August advance. Initial support rests with the 1.618% of the September 2023 advance at 2565 and is backed by the 200% extension of the 2524 (measure move for the 2022/2023 inverse head& shoulders formation). Losses should be limited to this threshold IF price is heading higher on this stretch. Broader bullish invalidation now raised to the July high-close / July high at 2469/83.

A breach above 2600 would keep the focus on a major Fibonacci confluence up near 2643/71-a region defined by the 100% extension of the 2015 advance and the 1.618% extension of the June rally. Note that numerous slopes converge on this threshold over the next few weeks and further highlight its technical significance- look for a larger reaction there IF reached. Subsequent resistance objectives eyed at 2743 and 2804 in the event of a breakout.

Bottom line: A breakout of the monthly opening-range takes Gold to fresh record highs with the rally now trading just below uptrend resistance. From a trading standpoint, losses should be limited to 2524 IF price is heading higher on this stretch with a close above 2600 needed to fuel the next major leg.

Keep in mind the FOMC interest rate decision is on tap tomorrow with markets now anticipating a 50bps cut (up from 25bps last week). Stay nimble into the releases and watch the weekly close 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