XAU/USD prints largest one-week gain since November 2023

Where we were

For those who read last week’s week-ahead post, you will recall the FP Markets Research Team pencilled in the following points about gold prices:

There’s no denying that the yellow metal is exhibiting an uptrend and has been since pencilling in a bottom around the $1,614 area in late 2022. We also witnessed an all-time high form at $2,147 in late 2023 after printing a heavy-handed upward spike through weekly resistance at $2,075. Since then, the precious metal has been gradually grinding lower but has left weekly support unchallenged at $1,968. Ultimately, though, we are in a correction phase, which is known to attract dip buying.

Knowing we have a clear uptrend in the longer term and are void of any immediate resistance on the weekly scale until $2,075, daily resistance coming in at $2,038 is potentially vulnerable to the upside this week. This follows the meaningful punch higher from the whipsaw seen through the $2,000 level into support between $1,971 and $1,986—made up of an AB=CD bullish pattern (100% projection ratio), horizontal support as well as a number of Fibonacci ratios.

XAU/USD bulls outperform; eyes on weekly level this week

Last week saw the precious metal rally +2.3%, its largest one-week advance since November 2023 and was fuelled largely by lower UST yields and a softer dollar. The upside move cleared offers around daily resistance from $2,038 (now marked support) and tested the resolve of offers at weekly resistance at $2,075 (also now marked support).

From a technical standpoint, this has opened the door for additional bullish movement in gold over the coming weeks. The ruptured weekly resistance level is likely to be watched closely. Should a retest of the level hold as support, this could pull in more buying and eventually fuel a move to challenge the all-time high of $2,147. If you look at the H1 chart, you will see that the break above the weekly resistance was clean. Consequently, should price retest the support this week, the approach will be important for buyers. For example, an AB=CD bullish formation might add weight to a rebound from the weekly level; a slow compressed approach could equally attract buying (think short-term pennant pattern).

Ultimately, irrespective of how one views (and trades) the break of weekly resistance, this remains a buyers’ market for now.

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