Gold Price Technical Outlook: XAU Breakout Targets Initial Resistance

Gold prices broke above technical resistance last week and while the broader focus in price remains weighted to the topside, the advance is approaching levels which may limit the rally near-term. These are the updated targets and invalidation levels that matter on the XAU/USD charts.

GOLD DAILY PRICE CHART (XAU/USD)

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Gold Price Chart - XAU/USD Daily

Technical Outlook: In my latest Gold Weekly Technical Outlook we note that the rally was approaching the first major threshold of resistance with, “a close above the 2018 open at 1302 to validate a larger breakout in price”. Price broke above the January opening-range on Friday with the advance taking bullion through 1302 early in the week.

The focus is on a daily close above this parallel (red) with subsequent resistance objectives eyed at the 78.6% retracement of the 2018 range at 1321. Initial support rests at former slope resistance (currently ~1286) with broader bullish invalidation at the monthly range lows at 1276.

GOLD 120MIN PRICE CHART (XAU/USD)

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Gold Price Chart - XAU/USD 120min

Notes: A closer look at price action shows gold trading within the confines of an ascending pitchfork formation extending off the January lows with bullion trading just below the upper median-line parallel around ~1313 today in New York trade (blue). The advance is at risk near-term heading into this region with initial support back at the weekly open at 1302. Near-term bullish invalidation rests at 1297- weakness beyond this zone would suggest a larger correction is underway with such a scenario exposing 1286.

Bottom line: While our broader outlook remains weighted to the topside, the immediate gold advance may be vulnerable heading into near-term slope resistance. From a trading standpoint, look for possible price exhaustion at these levels with a pullback to offer more favorable long-entries while within this ascending formation, ultimately targeting a breach higher. Keep in mind the FOMC interest rate decision is on tap tomorrow with Non-Farm Payrolls (NFP) slated for Friday- expect volatility.

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