Gold Price Targets: XAU Sell-off Intensifies – GLD Searches of Support
Gold prices are lower for the second consecutive week with the precious metal down more than 1% to trade at 1490 ahead of the New York close on Friday. The decline comes on the back of a massive reversal off key resistance last week and while the longer-term outlook remains constructive, Gold prices may be at risk for further losses in the near-term. These are the updated targets and invalidation levels that matter on the XAU/USD weekly charts. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.
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Gold Price Chart – XAU/USD Weekly
Notes:In my last Gold Price Weekly Outlook we warned that XAU/USD remained, “vulnerable while below confluence resistance at 1522/26.” Price registered a high at 1524 again this week for a re-test of this key threshold before turning lower and keeps the near-term risk weighted to the downside in GLD. Keep an eye on the weekly momentum profile with a break / close below the 70-threshold to fuel a deeper correction in price.
Initial weekly support steady at the highlighted trendline confluence around ~1465 with a break below 1451 needed to suggest a more significant high is in place. Ultimately a breach / close above the upper parallel would be needed to mark resumption of the broader uptrend targeting 1558 and the key 61.8% retracement of the decline off the 2011 record highs at 1586.
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Bottom line:The medium-term risk remains lower for gold but we’re looking for support nearby. From a trading standpoint, look to reduce short-exposure / lower protective stops on a drop towards the August swing lows at 1480 – look for a bigger reaction there IF reached with a close below needed to keep the shorts in control. Ultimately a larger pullback may offer more favorable long-entries closer to trend support. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.
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Gold Trader Sentiment (XAU/USD)
- A summary of IG Client Sentiment shows traders are net-long Gold – the ratio stands at +2.28 (69.5% of traders are long) – bearish reading
- Long positions are 6.9% lower than yesterday and 4.5% higher from last week
- Short positions are 5.1% higher than yesterday and 16.8% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed Gold trading bias from a sentiment standpoint.
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Previous Weekly Technical Charts
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
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