Gold Short-term Outlook: XAU/USD Drops to Multi-month Trend Support

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

• Gold prices plunge nearly 9.3% off record high- bears break May opening-range lows
• XAU/USD within striking distance of major support at multi-month uptrend- risk for price inflection ahead
• Resistance 3272/88, 3325 (key), 3381- Support 3132/37 (key), 3018, 2953/56

Gold is on the defensive this week with XAU/USD breaking support today at the May range-lows. The focus now shifts to a potential test of the yearly uptrend and the first real test for the bulls. Battle lines drawn on the short-term gold technical charts.

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 Outlook we noted that XAU/USD had, “slipped below uptrend support for the first time since the April breakout and threatens a deeper correction while below the median-line. From a trading standpoint, losses should be limited to 3131 / the lower parallel IF price is heading higher on this stretch with a close above 3319 needed to fuel another attempt at the highs.” Gol prices turned higher the following day with the rally faltering near the April high-close.

The subsequent reversal is now challenging a break of the May opening-range with multi-month trend support now in view at 3132/37- a region defined by the 38.2% retracement of the November advance and the 100% extension of the April decline. Note that the lower parallel converges on this threshold over the next few days further highlights the technical significance of this zone (area of interest for possible downside exhaustion / price inflection IF reached).

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 embedded descending pitchfork with the lower parallel also converging on the 3132/37 support zone. Initial resistance is now eyed at 3273/88 and is backed by the objective weekly-open at 3325. Broader bearish invalidation now stands with the record high-day close (HDC) at 3381.

A break / close below this key pivot zone would suggest a more significant high was registered last month / a larger trend reversal is underway. Subsequent support objectives eyed at the 50% retracement at 3018 and 2953/56- a region defined by the 1.618% extension, the February high, and the April low.

Bottom line: A reversal off multi-month uptrend resistance is now approaching trend support- risk for price inflection ahead. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards 3137- rallies should be limited to the weekly open at 3325 IF price is heading for a break with a close below parallel support needed to fuel the next major leg of the decline.

Keep in mind we get an update on the consumer over the next few days with U.S. retail sales and consumer sentiment on tap- watch the weekly closes here for guidance. Review my latest Gold Weekly Technical Forecast for a closer look at the longer-term XAU/USD trade levels.

Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

• Canadian Dollar Short-term Outlook: USD/CAD Surges off Support
• US Dollar Short-term Outlook: USD Bulls Steady After Fed Decision
• Euro Short-term Outlook: EUR/USD Poised for Breakout Ahead of Fed
• Swiss Franc Short-term Outlook: USD/CHF Coils Ahead of Fed
• Japanese Yen Short-term Outlook: USD/JPY Coils Ahead of BoJ, NFP
• British Pound Short-term Outlook: GBP/USD Bulls Eye 2024 High
• Australian Dollar Short-term Outlook: AUD/USD Halted at Resistance

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

Follow Michael on X @MBForex