Gold Short-term Outlook: XAU/USD Breakout Eyes Record Highs

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

Gold prices break out of July range– rallies nearly 2.7% for the week
XAU/USD advance testing near-term uptrend- remains constructive above weekly open
Resistance 3432 (key), 3451, 3474- Support 3374/81, 3350/56 (key), 3289-3303

Gold prices surged this week with a breakout of the July opening-range putting the record highs back in view. A test of uptrend resistance today threatens the immediate advance, but the technical outlook remains constructive while above the weekly open. Battle lines drawn on the XAU/USD short-term technical charts.

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Gold Price Chart – XAU/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; XAU/USD on TradingView

Technical Outlook: In last month’s Gold Short-term Outlook we noted that the XAU/USD was, “poised for a breakout of the weekly / monthly opening-range with the long-bias vulnerable while below the yearly high-day close.” Gold finally broke through the July range high on Monday with price surging more than 4.7% off the monthly low. The advance was halted today at initial resistance near the record high-close at 3432- risk for possible inflection off this mark in the days ahead.

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 ascending pitchfork extending off the June lows with the upper parallel further highlighting resistance here at 3432. Initial support rests along the median-line and is backed closely by the 61.8% retracement of the June decline / record high-day close (HDC) at 3374/81. Near-term bullish invalidation now raised to the weekly open / 61.8% retracement of the broader April decline at 3350/55.

A topside breach / close above the upper parallel could fuel another accelerated rally towards subsequent resistance objectives at the June high at 3451, the 1.618% extension of the late-June advance at 3474, and the record high at 3500- look for a larger reaction there IF reached.

Bottom line: Gold has broken out of the monthly opening-range and keeps the focus on a potential late-month high. That said, the rally has extended into near-term uptrend resistance today. From at trading standpoint, losses should be limited to the weekly-open IF price is heading higher on this stretch with a close above the upper parallel needed to fuel the next major leg of the advance.

Keep in mind the European Central Bank (ECB) interest rate decision slated for tomorrow with the BoC & FOMC rate decisions, Core PCE, and Non-Farm Payrolls on tap next week into the monthly cross. Stay nimble into the releases and watch the weekly closes for guidance. 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 with FOREX.com

Follow Michael on X @MBForex

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