Gold Price Weekly Outlook: XAU/USD To Threaten Yearly Range Lows

Gold prices are poised to close lower on the week with the precious metal down more than 1.4% to trade at 1294 ahead of the New York close on Friday. Although the broader outlook is still constructive, the risk remains for a larger setback heading into the April open. Here are the key targets & invalidation levels that matter on the Gold (XAU/USD) weekly chart.

GOLD WEEKLY PRICE CHART (XAU/USD)

(Click on image to enlarge)

Notes: In my previous Gold Weekly Technical Outlook we noted that a price rebound off slope support was vulnerable while below the “yearly high-week close at 1327 with a topside breach there shifting the focus back toward the 2018 high-week close at 1350.” XAU/USD registered a high at 1324 before turning over with price on pace to mark an outside weekly-reversal off the March high.

Key weekly support rests at 1275/76 where the objective yearly opening-range low converges on the 38.2% retracement of the 2018 advance and former pitchfork resistance. A break below this threshold would expose key confluence support and broader bullish invalidation at 1253/58- look for a bigger reaction there IF reached. Resistance steady at 1327 with a breach above the 2018 high-week close at 1350 needed to keep the long-bias in play targeting 1366 and 1380/91.

Bottom line: Gold is poised for a reversal off the yearly high-week close and leaves the risk lower heading into the April open. From trading standpoint, look for a reaction in price on a move towards confluence support 1275 or 1258 – both levels of interest for possible price exhaustion. Ultimately, a breach/close above 1327 is needed to mark resumption. I’ll publish an updated Gold Technical Outlook once we get further clarity on near-term price action.

GOLD TRADER SENTIMENT

• A summary of IG Client Sentiment shows traders are net-short Gold - the ratio stands at +3.32 (76.9% of traders are long) – bearish reading
• Long positions are 2.6% higher than yesterday and 7.5% higher from last week
• Short positions are 15.7% lower than yesterday and 17.9% 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 & last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.