Gold Technical Outlook: XAU/USD Short-term Trade Levels
- Gold prices surged for a third consecutive week with XAU/USD marking the largest weekly advance in nearly six-years (+8.36%) and the biggest weekly range on record
- XAU/USD now testing near-term uptrend resistance- risk for inflection into this slope
- Outlook remains constructive while above weekly support, with follow-through beyond 5K needed to fuel the next major leg of the advance
- Resistance 5000 (key), 5133, 5295- Support 4900, 4691, 4500/33 (key)
Gold made history this week, with XAU/USD posting the largest range on record as price climbed to the highest levels ever recorded. The magnitude of the move reflects a clear shift in market structure and has carried gold into near-term channel resistance near the psychological 5K level. This zone now represents a critical checkpoint for the advance, as traders assess whether the breakout can transition into another sustained leg higher or pauses to consolidate after an historic run. How price behaves around this threshold should offer important insight into the durability of the rally as the market moves deeper into the year. Battle lines drawn on the XAU/USD short-term technical charts.
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 Outlook we noted that XAU/USD was, “coiled just below resistance at the record high- look for inflection off this zone in the days ahead. From a trading standpoint, losses should be limited 4252 IF price is heading higher on this stretch with a close above 4382 needed to fuel the next leg of the advance.” Gold broke higher the following day with the advance extending 15% to fresh record highs into the start of the year.
On Wednesday, XUA/USD broke through uptrend resistance at the upper parallel (blue) of an ascending pitchfork formation we’ve been tracking since August. The bulls closed a fifth-consecutive daily advance on Friday with XAU/USD marking the largest single-week rally since March of 2020 (percent basis), and the largest price gain & weekly range ever. Momentum remains in deep overbought territory on the weekly, daily & 240min timeframes and the focus now turns to a decisive reaction at a key psychological barrier 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 shows XAU/USD trading into channel resistance on Friday near 5K- risk for inflection into this zone in the days ahead. An embedded channel off this week’s low has guided the most recent part of the rally with the upper parallel highlighting the 1.618% extension of the late-December advance at 5133 next week – look for a reaction there IF reached with a breach / daily close above needed to fuel the next major leg of the advance. Subsequent resistance objectives are eyed at the 3.618% extension of the late-October rally at 5295 and the 2.618% extension of the broader December 2024 advance at 5520.
Initial support rests with the weekly channel which converges on today’s low near 4900. Losses below this slope would threaten a near-term pullback within the monthly advance towards 4691- losses would need to be limited to this level for the monthly uptrend to remain viable. Broader bullish invalidation is now raised to the 2026 high-day close at 4500/33- a break / daily close below this pivot zone would suggest a more significant high is in place and larger trend reversal is underway.
Bottom line: The gold rally is testing uptrend resistance here with momentum still favoring the bulls for now. While the broader outlook remains constructive, the focus is on possible inflection here in the days ahead to offer guidance. From a trading standpoint, losses would need to be limited to 4900 IF price is heading higher on this stretch with a close above 5K needed to fuel the next leg of the rally.
Keep in mind the FOMC interest rate decision is on tap next week. Markets are widely expecting the Fed to hold rates, and traders will be fixated on Chair Powell’s subsequent commentary. With the latest weekly jobless claims release showing resiliency in the labor markets, the central bank may be more reluctant to move on rates as inflation remains well-above the 2% target. In his last presser, Powell stated that there were risks on both sides of the mandate, and if the jobs data continues to improve, the markets may have to reprice expectations for two rate cuts this year. Stay nimble into the release and watch the weekly closes for guidance here. Review my latest Gold Weekly Technical Forecast for a closer look at the longer-term XAU/USD trade levels.
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--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
