Gold Prices Bounce as USD Retreats, Can GLD Bulls Hold the Line？

Gold Price Talking Points:

• The bullish trend in Gold prices finally found a pullback in late-September trade as anticipated in last weeks Gold article.

• As USD-weakness has shown prominently thus far in Q4, Gold prices have bounced. But, Gold price action is testing resistance at a prior zone of support and that bigger-picture bullish theme may not yet be ready for continuation.

• DailyFX Forecasts are published on a variety of markets such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you‘re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Gold Bulls Come Back After Q4 Open

The late-September ramp in the US Dollar produced a noticeable dent in Gold prices. But, given the prior bullish trend, which started over a year ago and hastened through the summer until prices were well-overbought, the pullback theme, particularly around the Q3 quarter-end, isnt all that surprising. I had looked at this scenario around Gold prices a week ago, looking for support areas around 1475 and 1450. The latter of those levels has yet to come into play while the former was traded through. More interesting, however, is how the Q4 pullback in the US Dollar has helped to produce a reversal formation on the Daily Gold chart, as a spinning top on Tuesday led to a strong showing on Wednesday, pushing price action back above the 1500-handle. Thats so far continued through Thursday trade as even more negative US data has helped to prod the US Dollar lower and, correspondingly, Gold prices higher.

Gold Price Daily Chart

Chart prepared by James Stanley; Gold on Tradingview

Is the Gold Price Pullback Finished？

At this stage the return of the bullish trend in Gold could be difficult to chase. Prices have already ramped by more than $50 off the lows and near-term price action is currently testing as resistance a prior zone of support. This produces a potential trap scenario for Gold bulls looking at intermediate-term strategies, particularly considering the fact that a big USD-driver sits on the economic calendar for tomorrow morning with US Non-Farm Payrolls due.

Gold Price Four-Hour Chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Price Short-Term Strategy

For Gold bulls, navigating to shorter-term time frames may be of help as this can, at the least, help with moderating risk outlay for bullish approaches. Given the higher-highs and higher-lows that have posted so far since the Q4 open, traders can look for a continuation of that formula to allow for topside trend strategies. The prior higher-low printed around 1495.60, and below that is another prior support/resistance swing of interest around 1486.60. A pullback accompanied by buyer support ahead of the former of those prices keeps the short-term trend approach in working order; while a deeper pullback to the latter level at 1486.60 opens the door for swing strategies.

Gold Price Hourly Chart

Chart prepared by James Stanley; Gold on Tradingview