Gold Technical Outlook: XAU/USD Short-term Trade Levels
Gold prices have surged over 4.2% since the beginning of the month, with XAU/USD establishing its trading range for May just shy of a key technical barrier. As we approach tomorrow’s eagerly awaited US inflation report, the stage is set for a crucial market showdown. Here are the revised objectives and thresholds of significance on the short-term technical charts for XAU/USD.
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Gold Price Chart – XAU/USD Daily
In our previous Technical Outlook for Gold Price, we highlighted the nearing XAU/USD breakout towards the uptrend resistance level around ~2300. We emphasized that potential losses should find support around 2180 if gold intended to continue its upward trajectory, and a weekly closure above 2309 was crucial to ignite further bullish momentum. Following a shallow retreat of merely 1.64%, the intraday low hit 2267 the next day before swiftly reversing course, ultimately reaching fresh all-time highs at 2431 by April 12th.
Subsequently, a correction exceeding 6.3% from the peak found support early in the month at the multi-month uptrend line, but the subsequent rally encountered resistance last week at a convergence point. As we observe the May opening-range taking shape, attention is drawn to a potential breakout within the 2283-2383 range to provide directional cues in the days ahead.
Gold Price Chart – XAU/USD 240min
Taking a closer examination of gold price dynamics, we observe XAU/USD trading within the parameters of a descending pitchfork pattern originating from the all-time highs. The upper parallel of this formation indicates resistance around 2372/83, marked by the 61.8% Fibonacci retracement level of the April downturn and the highest close ever recorded (HC). Our immediate attention is drawn to the market’s response to this level, with the ongoing multi-week uptrend susceptible to reversal while remaining below it.
Initial support is anticipated along the near-term channel, currently hovering around the 2330s, closely followed by the 61.8% retracement level of the monthly range at 2316, and the May opening level combined with the 61.8% extension of the April decline at 2283/86. A breach or close below this threshold would redirect focus downward towards the end of the month, with subsequent support zones identified at the 100% extension level and the April low at 2224/28.
To signal a resumption of the uptrend, a decisive breach or close above this pivotal level is essential, exposing targets such as the all-time high at 2431 and the 1.618% extension of the October rally at 2516.
In summary, as the rebound from trend support approaches near-term downtrend resistance, we monitor the breakout potential within the May opening range for directional cues in the near future. From a trading perspective, it’s crucial to limit losses relative to the median line if the price is poised for further upward movement. Ultimately, we’re seeking signs of exhaustion lows, with confirmation provided by a breach or close above 2383 to signal the continuation of the uptrend.
Additionally, the upcoming release of the US Consumer Price Index (CPI) could inject volatility into the market, as expectations lean towards a slight alleviation of inflationary pressures. Exercise caution and flexibility around this event, and observe the weekly close for additional guidance. For a comprehensive analysis of longer-term XAU/USD trade levels, refer to my latest Gold Weekly Technical Forecast.
