Gold Price Plunge Continues into July

Gold Technical Price Outlook: XAU / USD Near-term Trade Levels

Gold prices plunged nearly 4% since the start of the week with XAU / USD threatening a steeper sell-off after breaking key support last month. The July battle-lines have been drawn with the bears now targeting downtrend support. These are the updated targets and invalidation levels that matter on the XAU /USD technical charts this week.

Gold Price Chart – XAU / USD Daily

Gold Price Chart - XAU / USD Daily - GLD Short-term Trade Outlook - GC Technical Forecast

Chart Prepared by Michael BoutrosTechnical Strategist; Gold on Tradingview

Technical Outlook: In last month’s Gold Price Outlook we noted that XAU / USD was trading, “just above technical support at 1818/27. From a trading standpoint, last week’s outside reversal candle does put a bearish tone on XAU / USD but a break / close below this threshold is still needed to mark resumption of the broader downtrend. ” It took a few days, but a break into the close of June fueled a leg lower in price with Gold plunging into a support pivot today at the December low / 78.6% Fibonacci retracement of the 2021 rally at 1753 / 61- the focus is on a daily close below this threshold to keep the immediate short-bias viable.

Gold Price Chart – XAU / USD 240min

Gold Price Chart - XAU / USD 240min - GLD Short-term Trade Outlook - GC Technical Forecast

Notes: A closer look at Gold price action shows XAU / USD breaking below the median-line yesterday with price now sitting at the 1853/65support zone- looking for possible price inflection here. A break lower exposes subsequent objectives at the August low-day close (1729), 1700 and the next major support zone at the 1670/82 Fibonacci confluence – look for a larger reaction there IF reached. Initial rexistence now eyed at the median-line backed by January low-day close at 1791 and the weekly open at 1811. Key resistance / bearish invalidation now lowered to 1818/27.

Bottom line: Gold prices have broken to fresh yearly lows and remain at risk for further losses in the days ahead. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards the lower parallels – rallies should be limited to the monthly open (1807) IF price is heading lower on this stretch. Keep in mind we are just now setting the monthly opening range with US Non-Farm Payrolls on tap Friday- stay tuned! Review my latest Gold Weekly Price Outlook for a closer look at the longer-term XAU / USD technical trading levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Gold Trader Sentiment – XAU / USD Price Chart

Gold Trader Sentiment - XAU / USD Price Chart - GLD Retail Positioning - GC Short-term Technical Outlook

  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +6.06 (85.83% of traders are long) – typically bearishreading
  • Long positions are6.15% higher than yesterday and 4.47% higher from last week
  • Short positions are15.59% lower than yesterday and 2.54% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.

Economic Calendar

Economic Calendar - Key Data Releases - Weekly Gold Event Risk

Economic Calendarlatest economic developments and upcoming event risk.

– Written by Michael BoutrosTechnical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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