- Gold is at an important crossroads in the bullish structure carved out over the last few weeks.
- A break of resistance this week will key critical or the bears will be back in control.
In last week's pre-open analysis, Gold, Chart of the Week: XAU/USD bulls eye a break of critical daily resistance, it was noted that there were prospects of a bull trend following the move out of the downside channel. However, the resistance needed to give:
Gold daily chart, live market
Last week, the price made the foundations for a breakout in the form of a W-formation. This is a reversion pattern whereby the price would be expected to revisit the support of the neckline as illustrated in the projected price trajectory in the above chart.
Should the neckline hold again, as it has in the past two adjacent formations, then the bulls will be in the runnings for a breakout in the coming days. To the upside, a break of $1,920 could be significant as it leaves the price imbalance towards $1,957 vulnerable ahead of $1,982.
On the other hand, should the bears commit at $1,885 or below, then the downside risk is to May 16 lows at $1,786:
As for positioning, net length in the gold market remains fairly sticky, with additional length added and modest shorts covering, analysts at TD Securities noted.
''Indeed, with the Fed's next moves well telegraphed, the cohort of discretionary traders who have become more prominent since the pandemic era, are reluctant to be shaken out with the post-September Fed path unknown amid growing recession concerns,'' they said.
''While this dynamic has seen gold prices remain firm in the face of a strong dollar and rising rates, we still think the yellow metal will ultimately succumb to the Fed's fight against inflation.''
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD: Next upside target comes at 0.6550
AUD/USD managed well to shrug off the marked advance in the Greenback as well as geopolitical tensions, regaining the area above the 0.6500 hurdle ahead of preliminary PMIs in Australia.
EUR/USD: Further losses now look at 1.0450
Further strength in the US Dollar kept the price action in the risk-associated assets depressed, sending EUR/USD back to the 1.0460 region for the first time since early October 2023 prior to key releases in the real economy.
Gold faces extra upside near term
Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.