Where them gold bugs at?
Spot gold (XAU/USD) looks ready to extend a longer-term trend after touching a few technical support levels.
Think the precious metal will see new record highs this week?
Gold (XAU/USD) 4-hour Forex Chart by TradingView
In case you missed yesterday’s headlines, a lack of top-tier data releases enabled the markets to take a breather from the previous week’s extended moves.
JPow had his moment under the spotlight, however. In a discussion, he supported further interest rate cuts but also revealed that he’s only seeing around 50bps further reduction until the year’s end. This is less dovish than what the markets had been pricing in, which is probably why the U.S. dollar gained pips against its counterparts.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. dollar and gold, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
XAU/USD, which hit new record highs near $2,685 last week, has pulled back to the $2,630 levels. That’s where the Fibonacci retracement levels and S1 Pivot Point line are! More notably, gold’s current prices aren’t too far from a trend line support that’s been solid since early September.
Green candlesticks and sustained trading above the $2,630 zone sets XAU/USD up for a trip back to its $2,680 previous highs. And, if there’s a fundamental driver behind a bullish momentum, the yellow metal can hit new record highs.
Of course, XAU/USD can still extend its downswing. Look out for consistent trading below the $2,600 levels which would put the commodity below the 38.2% and 50% Fibonacci levels, S1 Pivot Point, and the trend line support. Consistent trading below the potential support area may draw in gold bears who could drag XAU/USD to potential inflection points like $2,580 or $2,525.
Whichever way you decide to play this setup, make sure you practice proper risk management and check out our Currency Correlation tool!