Gold breakout underway as Silver Eyes Resistance
Gold Price Technical Prediction: Weekly XAU/USD Trading Levels
Gold prices rose this week at XAU/USD Up more than 4.8% to 1762 in US early trade on Friday. The rally marks the biggest one-week rise since July 2020, with a break from the annual downtrend threatening a major reversal for the yellow metal. These are the updated targets and invalidation levels used for the XAU/USD weekly chart. Check my latest Weekly strategy webinar for a detailed breakdown of this technical gold setup and more.
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Gold Price Chart – XAU/USD Weekly
Remarks: in my last Weekly gold price outlook I noted that XAU/USD is “prepared for a potential breakout in the coming days and is focused on a weekly close above the 2021 lows. Good place to place protective stops from a trading standpoint – look for a reaction on a stretch towards 1791 to get your bearings.” Gold is up more than 4.6% this week and the price is now nearing confluence Resistance to January low at weekly close / 38.2% Fibonacci Retracement of 2022 range at 1788/91 – Note that the 2018/2019 trend line is also converging towards this line in the coming weeks, with the 52 week moving average slightly higher near ~1806. A break/weekly close above this level is needed to indicate that a major reversal is underway.
Weekly support is now resting back on the yearly low weekly close / 2021 swing lows 1675/77 supported by critical support around the yearly lows at the March 2020 reversal close and the 50% retracement 1617/31– A break/weekly close below this level would threaten the resumption of the yearly downtrend 1560.
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bottom line: A breakout in gold prices is underway and the focus is on a possible price flexion/exhaustion heading towards the resistance target slightly higher. From a trading perspective, try reducing portions of long exposures / raise protective stops on a stretch towards 1800 – look for a larger reaction there for guidance. Losses should be limited to 1676 IF the price actually rises here. Remember we have US elections and key inflation data (CPI) on demand – stay agile here. Check my latest Short-term technical outlook for gold prices for a closer look at XAU/USD near-term trading levels.
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Gold Traders Sentiment – XAU/USD price chart
- A summary of IG customer mood shows traders are net long gold – ratio is +2.66 (72.70% of traders are long) – typically bearish read
- Long positions are 7.82% lower than yesterday and 20.35% lower than last week
- Short positions are 1.69% higher than yesterday and 30.74% higher than last week
- We typically view crowd sentiment as contrarian and the fact that traders are net long suggests gold prices could fall further. Still, traders are less net long than yesterday and compared to last week. Recent changes in feeling warn that the current trend in gold prices could soon reverse higher, although traders remain net-long.
of customers are net long.
of customers are mesh short.
Silver Price Chart – XAG/USD Weekly
A similar scenario unfolds in Silver although the big breakout from the annual downtrend has not yet happened. A break of the August/October monthly highs/resistance at the 50% retracement of the 2020 range and the 2016 swing high brings XAG/USD into the 52-week moving average here at ~21.80 with key resistance only higher at 22.35– requires a break/close above to indicate a major reversal is underway here.
A breakthrough at the top reveals more targets at the 2022 annual opening 23.28 and April midweek reversal close at 05/24– Look for a bigger reaction there when it’s reached. Initial support is around the midline (currently ~20.10s) supported by a more significant confluence zone 18.28/68– Any weakness beyond this line would threaten the resumption of the broader downtrend.
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– Written by Michael ButrosTechnical Strategist at DailyFX
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