Gold Price Outlook

Gold prices are up 1.2% since the start of the week with XAU/USD rebounding off critical uptrend support into the open – the focus is on possible exhaustion on this near-term recovery and while the broader outlook remains constructive, the risk remains for a deeper setback while below 1850. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts.

Technical Outlook: XAU/USD monthly opening-range is set just below confluence resistance – breakout to offer guidance. The post-FOMC breakdown saw prices plummet through the June range-lows with gold rebounding off confluence support early in the week at 1764-69- a region defined by the 50% retracement of the 2020 advance, the 61.8% Fibonacci extension of the 2020 decline and the 61.8% retracement off the March rally. Note that this threshold also converges on trendline support and break / close below is needed to mark resumption with the immediate decline vulnerable while above.

Notes: A closer look at Gold price action shows XAU/USD trading within the confines of a descending pitchfork formation with the decline rebounding off the lower parallel into the weekly open. Initial resistance stands at the 2012 high at 1795 backed by near-term bearish invalidation at 1820. A break below this key threshold exposes subsequent support objectives at 1729, the April open at 1707 and the 38.2% retracement of the 2015 advance at 1682.

Bottom line: Gold plunged into a critical uptrend support and the focus is on a reaction off this threshold. From at trading standpoint, a good zone to reduce short-exposure /lower protective stops- look for topside exhaustion ahead of the upper parallel IF price is indeed heading lower with a break / close below 1763 needed to fuel the next leg lower. Ultimately, a XAU/USD would need to breach above the 61.8% retracement of the monthly range at 1857 to mark resumption of the broader uptrend. Stay nimble heading into key US inflation data on Friday with Core Price Consumption Expenditure (PCE) likely to fuel some volatility here.

STAY TUNED!