Gold bulls took firm control this week in a significant manner. Most of the upward movement occurred during the final two days, marking a distinct and decisive breakout from the pattern that has been forming since the all-time high was reached in early April.
During the Tuesday webinar, I analyzed this situation when Gold was maintaining support around 2309 while facing resistance from the wedge formation above. The breakout commenced on Thursday, and the momentum quickly surged beyond the resistance levels at 2319-2326, leading to a rapid and aggressive climb up to 2372.68. This level corresponds to the 61.8% Fibonacci retracement of the recent pullback.
Four-Hour Price Chart of Gold (XAU/USD)
Gold: The Challenge of Reaching $2400
Currently, the price is rallying towards the highs seen in April. Given this context, the crucial inquiry revolves around whether buyers possess sufficient drive to sustain a breakthrough beyond the psychologically significant level of $2400.
In April, there were two instances of attempted breakouts at this price point, both of which ended in failure. The second attempt resulted in a lower high, followed by a more pronounced pullback. During the initial test above $2400, Gold had entered an extremely overbought state, evidenced by the rapid ascent of the weekly Relative Strength Index (RSI) towards the 80-level.
Gold Daily Price Chart Analysis
Shorter-Term Strategy for Gold Trading
Currently, Gold prices have surged to establish a new higher high, prompting the question of whether the bullish momentum can sustain a higher low. There are specific levels worth monitoring for such a scenario, particularly with the upcoming release of the CPI data scheduled for next Wednesday, which could significantly influence market sentiment. If the inflation data reveals a softer-than-expected outcome, it could bolster expectations of potential rate cuts by the Fed, thereby fueling upward momentum in Gold prices, potentially leading to a fresh all-time high and a push towards the $2,500 mark. Conversely, if the Core CPI figure prints at 3.8% or higher, concerns regarding entrenched inflation could resurface, mirroring the apprehensions prevalent in the latter part of April.
The 50% retracement level of the recent pullback aligns with the price point of 2354, coinciding with a previous swing low observed in mid-April, forming a notable support zone. Further down, at the 38.2% retracement level, lies a confluence with prior resistance levels, which could also serve as significant support for a higher low. Even if the price retreats to the range of 2319-2326, there could be a rationale for considering this area as support, given its history of halting bullish advances for two weeks before eventually yielding to a breakout this week.
Four-Hour Price Chart Analysis for Gold (XAU/USD)
