Gold prices are on the verge of marking a third consecutive weekly advance, with XAU/USD surging to fresh record highs in U.S. trade. The rally is currently testing a critical resistance zone that has been monitored for months, raising concerns about potential price inflection. A failure to close above this threshold could signal exhaustion for the bulls, making the upcoming weekly close crucial.
Key Takeaways
- Gold prices are testing major resistance at record highs.
- A weekly close above 2643/71 is essential for sustaining the rally.
- Immediate support levels are at 2622 and 2517/24.
Technical Outlook
In last month’s Gold Weekly Price Forecast, it was noted that XAU/USD had broken above a significant technical hurdle, with weekly momentum still deep in overbought territory. Traders are advised to reduce portions of long exposure or raise protective stops as the price approaches the upper resistance levels of 2643/71. Recent data shows that gold surged more than 4% over the past two weeks, now testing this critical resistance zone.
A weekly close above 2643/71 is necessary to keep the immediate rally viable. If achieved, this could fuel another accelerated advance, with resistance objectives at:
- 2743: 200% extension of the 2022 advance.
- 2804: 2.618% extension of the 2022 decline.
Both levels are of interest for potential topside exhaustion or price inflection if reached.
Support Levels
Weekly-open support is currently resting at 2622, backed by:
- 2517/24: Defined by the 1.618% Fibonacci extension of the October advance and the measured inverse head-and-shoulders objective of the 2022 advance.
Numerous slopes converge on this threshold, and any pullbacks would need to be limited to this level for the September breakout to remain in play. The broader bullish invalidation has now been raised to the objective May high at 2450.
Market Sentiment
The bottom line is that gold is testing a critical resistance zone this week, and the focus is on the reaction off this key threshold. Bulls appear vulnerable while below this level. From a trading perspective, it may be prudent to reduce long exposure and raise protective stops, with losses expected to be limited to 2517 if gold is heading higher.
A close above 2671 is needed to keep the immediate advance viable and fuel the next leg in price.
Upcoming Economic Data
Traders should also keep an eye on key U.S. inflation data set to be released soon, particularly the August Core Personal Consumption Expenditure (PCE). This data could significantly impact market sentiment and gold prices as the month draws to a close.
As the market prepares for this pivotal moment, staying nimble and vigilant will be essential for traders navigating the complexities of gold price movements.
