Gold Short-term Outlook: XAU/USD Soars to Highs, Stalls Below 3600

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

Gold break of yearly uptrend snaps back- rebound now testing resistance at major pivot-zone
XAU/USD weekly / monthly opening-range taking shape- break to define next leg
Resistance 34578, 3600(key), 3666- Support 3491-3500, 3432/51 (key), 3374/81

Gold prices surged to fresh record highs this week with XAU/USD poised to mark a third consecutive weekly advance. Price is responding to confluent uptrend resistance today with the bears now threatening to snap a seven-day winning streak. The immediate advance may be vulnerable while below 3600. Battle lines drawn on the XAU/USD short-term technical charts ahead of tomorrow’s Non-Farm Payrolls report.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold technical setup and more. Join live on Monday’s at 8:30am EST.

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 rally may be vulnerable near-term and that, “From at trading standpoint, losses would need to be limited to the monthly open IF price is heading higher on this stretch. A close above 3451 is ultimately needed to fuel the next leg of the broader multi-year uptrend.” Gold fell nearly 2.9% off the monthly high before rebounding off the May trendline, well ahead of the monthly open.

The subsequent breakout has now extended more than 8% off the late-August lows with gold exhausting into resistance last week at the upper parallel of the ascending pitchfork extending off the July / August lows- looking for a reaction off this mark early in the month with the broader rally vulnerable in the near-term while below this slope.

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 reversing sharply off confluent resistance at the 1.618% extension of the June advance and the 100% extension of the Broder May advance at 3578. A topside breach above this threshold exposes the upper parallel / 3600- look for a larger reaction there IF reached with a close above this slope needed to fuel the next major leg of the gold advance. Subsequent resistance objectives are eyed at the 300% extension of 2011 decline at 3666, and the 1.618% extension of the May advance at 3782.

Initial support rests with the 100% extension of the recent decline / April high at 3492-3500 with bullish invalidation at 3432/52- a region defined by the June high close, the objective September open, the 38.2% retracement of the June advance and the June swing high. A break below this threshold would suggest a more significant high is in place / a larger correct is underway with the next technical consideration seen at 3374/81.

Bottom line: Gold responded to confluent uptrend resistance this week with the September opening-range taking shape just below- look for the breakout in the days ahead for guidance. From a trading standpoint, pullbacks should be limited to 3432 IF price is heading higher on this stretch with a close above 3600 ultimately needed to fuel the next major leg of the gold advance.

Keep in mind we get the release of Non-Farm Payrolls tomorrow with key inflation data on tap next week. Stay nimble into the release and 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.

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--- Written by Michael Boutros, Sr Technical Strategist

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