Gold Technical Outlook: XAU/USD Short-term Trade Levels
- Gold prices plunge more than 11% from record highs- bulls look to reassert after near-term breakout
- While the broader trend remains vulnerable, the recent pause in selling suggests a possible near-term inflection off current levels
- Focus now turns to today’s FOMC rate decision, with markets watching Powell’s remarks for clarity on forward guidance into year-end
- Resistance 4076, 4125 (key), 4192- Support 3900, 3847/59 (key), 3784
Gold prices are attempting to recover after last week’s sharp selloff, with XAU/USD rallying nearly 3.7% off the weekly low ahead of the Federal Reserve rate decision later today. The pullback from record highs has paused for now, leaving the focus on whether this recovery marks the start of a broader rebound or simply a pause before the next leg lower. Traders are bracing for heightened volatility as the Fed releases its policy statement and Chair Powell’s press conference provides fresh insight into the central bank’s outlook heading into year-end. 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 week’s Gold Short-term Outlook we noted that the XAU/USD had, “reversed off multi-month uptrend resistance with the pullback now testing initial uptrend support at the median-line- looking for a reaction off this mark for guidance with the near-term risk weighted to the downside while below the weekly open.” The sell-off accelerated into the weekly open with gold extending 11.3% off the monthly high before rebounding yesterday at 3900. The recovery is now testing the median-line as resistance ahead of the Fed and the focus is on a reaction off this slope into the close of the week / month.
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 breaking out of the descending channel we’ve been tracking off the highs with price extending nearly 3.7% off the weekly low. Initial resistance is now eyed at the 38.2% retracement at 4076- note that the August trendline converges on this threshold over the next few days. Ultimately, a breach / close above the 10/21 reversal close at 4125 is needed to suggest a more significant low is in place / a larger recovery is underway. Subsequent resistance objectives eyed at the 61.8% retracement at 4192 and the 10/17 reversal close at 4252- strength beyond this threshold would threaten resumption of the broader uptrend.
Initial support rests at 3900 and is backed by the 50% retracement of the late-August advance / October open at 3847/59- area of interest for possible downside exhaustion / price inflection IF reached. Losses below this threshold would threaten more meaningful test of the yearly uptrend with subsequent support seen at the 100% extension of the recent decline at 3784 and broader bullish invalidation at the 61.8% retracement at 3700/20.
Bottom line: While a break below the median-line does leave the risk tilted to the downside, a breakout of the channel leaves the potential for further gains in the near-term. From a trading standpoint, rallies would need to be limited to 4125 IF price is heading for a deeper correction on this stretch. Ultimately a larger setback here may offer more favorable opportunities closer to uptrend support with a close above 4252 needed to mark uptrend resumption. Look for possible downside exhaustion on stretch towards the monthly open for guidance.
The Fed rate decision is on tap later today with markets fully priced for a 25bps cut. The focus will be on expectations for the December rate decision and whether the central bank will be ending QT (quantitative tightening). As it stands, markets are pricing an 85% chance the Fed will cut another 25bps into the close of the year. Keep in mind we still get the release of the Bank of Japan (BoJ) and the European Central Bank (ECB) rate decisions overnight with both expected to keep rates on hold. Stay nimble into the release & subsequent presser with Powell and watch the weekly / monthly close 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, Sr Technical Strategist
Follow Michael on X @MBForex
