Gold Price Weekly Outlook: Breakout Stalls at Multi-year Resistance

Gold Price Weekly Outlook: Breakout Stalls at Multi-year Resistance

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Gold Price Weekly Outlook: Breakout Stalls at Multi-year Resistance

Gold prices rallied for a fourth-consecutive week with the advance now testing the 2016 resistance slope. These are the levels that matter on the XAU/USD weekly chart.

Gold prices are up more than 0.7% this week and marks the fourth consecutive weekly advance in XAU/USD. The rally takes price into a multi-year trendline and leaves the immediate advance vulnerable while below this slope- watch the weekly close. These are the updated targets and invalidation levels that matter on the XAU/USD weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this setup and more.

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Gold Weekly Price Chart (XAU/USD)

Gold

Notes:In my last Gold Price Weekly Outlook we noted that the, “Gold prices remain constructive while above 1275/76 heading into the open of June trade with a weekly close above 1302 needed to fuel the next leg higher in price.” Bullion has now rallied more than 7.2% off the yearly lows with the advance covering the entire yearly range in just a few weeks. XAU/USD is now testing a multi-year trendline extending off the 2016 highs – a weekly close above this threshold is needed to keep the long-bias viable.

Initial weekly support rests at the February high-close at 1327 with medium-term bullish invalidation at the 2018 yearly open / trendline support at 1302. A topside breach keeps the focus on subsequent resistance objectives at the 2016 high-week close at 1366 and the 38.2% retracement / 2014 high at 1380/92 (critical).

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Bottom line:The immediate gold price advance is vulnerable while below this slope – risk for exhaustion IF price fails a weekly close above 1351. From a trading standpoint, a good place to reduce long-exposure / raise protective stops. Ultimately, we’ll be on the lookout for more favorable entries on a pullback while above 1302 targeting a topside breach of 2016 highs. I’ll publish an updated Gold Price Outlook once we get further clarity in near-term price action. Review our latest Gold 2Q forecasts for a longer-term look at the technical picture for XAU/USD prices.

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Gold Trader Sentiment

Sentiment

  • A summary of IG Client Sentiment shows traders are net-long Gold – the ratio stands at +1.3 (56.6% of traders are long) – weak bearish reading
  • Long positions are 2.2% lower than yesterday and 7.3% higher from last week
  • Short positions are 6.6% higher than yesterday and 0.1% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Yet, traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Gold (XAU/USD) trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

Previous Weekly Technical Charts

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— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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