Gold Short-term Technical Outlook: XAU/USD Bulls Get Tested

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

• Gold prices plunge 4% off record highs- two-day rebound now eyeing initial resistance
• XAU/USD weekly opening-range breakout pending- US Core PCE on tap
• Resistance 2426/31, 2458, 2517– Support 2387, 2366 (key), 2326

Gold prices are up nearly 0.9% this week with a two-day rally in gold paring nearly half of the recent decline from all-time highs. XAU/USD is already approaching the first technical resistance hurdle and the focus is on o breakout of the weekly opening-range in the days ahead with key US inflation data on tap. These are the updated targets and invalidation levels that matter on the XAU/USD short-term technical charts heading into the close of the month.

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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 that XAU/USD was, “trading just below slope resistance into the start of the month with the immediate focus on a breakout of the June 7 trading range.” The range broke higher just days later with gold surging more than 8.5% off the June lows to register a fresh record high at 2483. A four-day decline of more than 4% was halted at support on Monday and the immediate focus is on this near-term recovery with the weekly opening-range preserved into Wednesday.

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 formation with the median-line catching the highs last week. While the broader outlook is still constructive, the risk remains for a test of uptrend support after pivoting back below a major inflection zone.

Resistance remains with the April high-day close (HDC) / April high at 2426/31 and is backed closely by the record HDC at 2458- a breach / close above this threshold is needed to fuel the next leg higher in price with subsequent resistance objectives eyed at the 1.618% extension of the October rally at 2517 and the 1.618% extension of the broader 2022 rally at 2565.

Initial support rests with the June high at 2387 with near-term bullish invalidation set to the 61.8% Fibonacci retracement of the late-June rally at 2366. A break / daily close below this formation would threaten the multi-week uptrend and risk a larger correction in gold. Monthly-open support rests at 2326 with key support unchanged at 2277/86- a region defined by the May low, the May-open, and the June low.

Bottom line: Gold responded to uptrend resistance last week and the risk is for a possible test of trend support in the days ahead. From a trading standpoint, the immediate focus is on a breakout of the weekly opening-range for guidance– rallies should be limited to the high-day close IF price is heading lower on this stretch with a break below 2366 needed to suggest a larger pullback is underway. Ultimately, we’re looking to confirm / identity an exhaustion low before resumption of the broader uptrend with a close above 2458 needed to fuel the next move to fresh record highs.

Keep in mind we get the releases of key US inflation data into the close of the week with the US Core Personal Consumption Expenditure (PCE- the Fed’s preferred inflationary gauge) on tap Friday. Stay nimble into the release 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