XAU/USD outlook: Gold continues to move within larger range

Slobodan Drvenica Windsor Brokers

XAU/USD

Gold remains at the back foot at the start of the week, after Friday’s 0.8% drop and a weekly close below $2500.

The metal’s price was deflated by US labor data on Friday, as employment increased below expectations but unexpected drop in jobless rate cooled fears about stronger weakness in the labor sector, contributing to bets for Fed’s rate cut by 0.25% rather than more aggressive approach with 50 basis points cut.

Markets shift focus towards release of US inflation data for August, due later this week, which will provide more details about Fed’s decision in September’s monetary policy meeting.

On the other hand, the yellow metal remains underpinned by growing concerns about the situation in the US economy, as well as persisting geopolitical tensions, which adds to scenario of prolonged consolidation before the price resumes higher.

Technical picture remains bullish overall despite daily studies somewhat weakened, with larger bullish bias to stay intact while the price holds above three-week range floor at $2470 zone.

Three consecutive weekly Doji candles point to strong indecision and signal prolonged sideways mode, with mixed daily studies (14-d momentum turned negative, stochastic and RSI remain in positive territory, MA’s in mixed configuration) contributing to current picture.

Technical studies still favor scenario of $2470 pivot holding dips and offering fresh buying opportunities however, fundamentals are likely to play a key role and to gold’s key driver in the near term.

In case $2470 support is lost, stronger pullback towards $2431 (rising 55DMA) and $2400/$2390 zone (psychological / 100DMA) in extension, could be likely scenario.

Conversely, bulls may strengthen grip if the price returns and stabilizes above $2500 level and shift focus towards new all-time high at $2531, violation of which to spark fresh acceleration higher.

Res: 2500; 2505; 2523; 2531.
Sup: 2485; 2474; 2470; 2457.

Interested in XAU/USD technicals? Check out the key levels

1. R3 2566.7
2. R2 2547.95
3. R1 2522.7
PP 2503.95
1. S1 2478.7
2. S2 2459.95
3. S3 2434.7

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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