Most Read: Japanese Yen Sentiment Analysis & Technical Outlook – USD/JPY, EUR/JPY, GBP/JPY
Gold (XAU/USD) has rallied spectacularly this year, hitting an all-time high near $2,450 in early May. The upward momentum, however, has begun to fade, with prices down more than 4% from their recent peak over the past few trading sessions, a sign that bulls are starting to head for the exits, in search of more attractive opportunities.
With market dynamics realigning with fundamentals following the speculative frenzy seen during the first few months of the year, the downward correction in the precious metals space of late could continue in the near term. This scenario becomes more probable if sticky U.S. inflation compels the Fed to maintain higher interest rates for longer – an outcome poised to benefit the U.S. dollar.
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For greater confidence in the bearish outlook, traders may opt to wait for more definitive cues. One such indication could be a breach of the support threshold around $2,335, where a key trendline intersects with the 38.2% Fibonacci retracement of the March-May rise. A higher-than-average trading volume accompanying such a technical breakdown would further validate the signal.
In the event of XAU/USD decisively dipping beneath $2,335, the 50-day simple moving average at $2,325 will be an important line of defense against the sellers’ next offensive. While taking out this floor might be difficult, a successful breach could pave the way for a deeper pullback, drawing focus to a crucial Fibonacci level at $2,265, a tad below this month’s swing low.
Conversely, if prices pivot to the upside and resume their upward journey, initial resistance can be identified at $2,365, followed by $2,377. Traders should keep a close eye on this latter ceiling, as a breakout could reduce the odds of additional weakness and facilitate a move towards $2,420. Continued gains could then bring the all-time high within reach.
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| Change in | Longs | Shorts | OI |
| Daily | 2% | 1% | 2% |
| Weekly | 16% | -4% | 8% |