Gold Rally Tests Key Support After XAU/USD Threat at ATH

Gold Talking Points:

• Gold was the big story for much of last year as it gained as much as 40% from the February lows to the October high.
• The rally calmed into end-of-year trade as cryptocurrencies put in a massive jump after the election, but so far in 2025 bulls have continued to push and the bull pennant formation has led to topside trends. The $2750 level hasn’t been an easy price for bulls to leave behind, however.
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Gold was the big story across macro markets for much of last year but given everything that happened in the final two months of 2024 that theme started to get less attention; and, instead, headlines focused in on cryptocurrencies even as Treasury rates went in the opposite direction of FOMC rate cuts.

But from a technical perspective that Q4 pullback wasn’t necessarily a ‘bad’ thing for the larger overall bullish trend. The move had gotten quite overbought from both monthly and weekly time frames, and it was becoming increasingly more difficult to chase-higher.

And the pullback that started in late-October and got another push around the U.S. election in early-November even took on form of a clean symmetrical triangle, which when paired with the prior bullish trend made for a bull pennant formation.

So far in early-2025 trade bulls have been back at work, forcing a top-side breach of formation on the way to bullish continuation. The prior high remains in-place, however, as buyers haven’t yet been able to take out the October swing-high of 2789.91 in spot, which I’ll look at in greater detail below.

Gold Weekly Chart

Gold Shorter-Term

From the daily chart we can see a consistent bullish run after the FOMC rate decision in December, which helped to prod prices below $2600, albeit briefly. That low connected with the prior November low built a bullish trendline, which constitutes the support side of the symmetrical triangle.

It’s been mostly higher-highs and higher-lows ever since, from the daily chart, with prior swings at 2771 and 2731 giving some context for near-term inflections. Taking a step back, it’s the 2750 level that seems to be problematic for bulls as there hasn’t yet been much for sustained drive above the major psychological level.

And on that topic of psychological levels, it’s the 2800 handle that buyers haven’t been able to force a test of yet, with the October swing high falling just about $10 short, and then the Friday swing high falling a few dollars short of that.

Gold Daily Price Chart

Gold Shorter-Term

As of this writing a brisk economic calendar is ahead. The FOMC rate decision later this afternoon is followed by the European Central Bank tomorrow morning, and then there’s an important U.S. inflation release set for Friday morning.

From the four-hour chart in gold, matters are bit more tenuous than what showed on the daily chart above, as last Friday’s sell-off, which sourced from a lower-high and a failure to test the 2789.91 level, led to a lower-low on Monday morning.

That move caught a bounce from the 2731 prior swing but that bounce, so far, has held another possible lower-high at 2763, with price retreating back to the 2750 level where it’s currently grasping for support.

Given how much risk is on the headline we have to open the range of possible outcomes, but with price still holding the bullish trendline buyers still have a case to be made, at this point. If that fails, however, meaning we’d also be seeing a failure of support at 2750, then the door opens for a test of 2731 and then 2721, which was a notable level previously as it held three different resistance inflections. And, importantly, this price hasn’t been tested for support since the breakout, so if it does come into play – and it can hold the low from the four-hour or daily – the door can open for short-term bullish reversals. The question at that point is whether sellers defend lower-highs or whether a bullish reversal can turn into anything more.

On the topside of price, the 2771 level remains big and then above that, the major question is tests of the 2786 and 2789 levels. But, realistically, I think it’s the expectation of a 2800 test that has, so far, allowed for those highs to remain in-place. Which means if we get the topside breakout, chasing beyond $2800 could be a dangerous prospect.

Gold Four-Hour Price Chart

--- written by James Stanley, Senior Strategist