Gold prices have continued to coil just below long-term technical resistance with major event risk on tap into the close of July trade. These are the updated targets and invalidation levels that matter on the XAU/USD charts heading into FOMC / NFP / August open- buckle up! Review this my latest Strategy Webinar for an in-depth breakdown of this Gold trade setup and more.
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Gold Price Chart – XAU/USD Daily
Technical Outlook: In my latest Gold Price Outlook we noted that XAU/USD advance was, “vulnerable below this level (1433) near-term with monthly open support eyed at 1409.” Price marked an outside-day reversal the following day with the high registering at 1433 before turning. The decline failed last week just ahead of the July open (low registered at 1411) and despite the recent rebound, the immediate focus remains on a break of the 7/25 daily range.
Daily support steady at 1409 with near-term bullish invalidation raised to 1400. A break / close below the 38.2% retracement of the yearly range at 1381 would ultimately a suggest a larger correction is underway. Topside resistance unchanged at 1451 – a breach / close above is needed to mark resumption of the broader breakout targeting 1483.
Gold Price Chart- XAU/USD 120min
Notes: A closer look at gold price action shows XAU/USD holding just above basic trendline support extending off the 7/9 low. Initial resistance at 1433 backed by 1437– both levels of interest for possible topside exhaustion / short-entries IF reached. Weekly open support rests at 1418 with a break below the July open at 1409 needed to assert a larger move.
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Bottom line: Gold prices remain vulnerable heading into major event risk later this week with the FOMC interest rate decision and US Non-Farm Payrolls on tap into the monthly open. From at trading standpoint, looking for possible exhaustion on a stretch into 1433/36 for guidance- IF that holds, expect a larger decline before resumption of the broader advance. Ultimately, a larger correction may offer more favorable long-entries closer to trend support. Review my latest Gold Weekly Technical Outlook for a longer-term look at the technical picture for XAU/USD prices.
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– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
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