48.94 F
London
November 7, 2024
PI Global Investments
Gold

Bearish Scenario Contingent on Support Breakdown


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.

For an extensive analysis of gold’s fundamental and technical outlook, download our complimentary quarterly trading forecast now!

Recommended by Diego Colman

Get Your Free Gold Forecast

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.

Interested in learning how retail positioning can shape the short-term trajectory of gold prices? Our sentiment guide has the information you need—download it now!

Change in Longs Shorts OI
Daily 2% 1% 2%
Weekly 16% -4% 8%

What does it mean for price action?

Get My Guide

GOLD PRICE TECHNICAL CHART

Gold Price Chart Created Using TradingView



Source link

Related posts

‘Gold, I think everyone wants a gold medal’ – The Irish Times

D.William

XAU/USD needs a soft US CPI inflation report to take on the $2,500 level

D.William

Gold holds steady above key support level amid market fluctuations

D.William

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.