Spot gold (XAU/USD) is testing a multi-month support zone!
Is this where the bulls make a stand, or are we about to see a downside breakout?
We’re diving into the 4-hour chart for more clues:
Gold (XAU/USD) 4-hour Chart by TradingView
Gold demand has cooled recently, thanks to easing global trade tensions and a rebound in the U.S. dollar.
Meanwhile, improving U.S. trade prospects and the Fed’s cautious stance on further rate cuts are keeping the dollar supported for now.
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 gold and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
After falling from $3,430 to $3,230 over the past week, XAU/USD is now sitting right on key technical support.
On the 4-hour chart, it’s tagging the base of a descending triangle pattern that’s been in play since mid-April. It’s also hovering around the S1 Pivot Point ($3,230) and the 200 SMA, which has held strong since mid-January.
So, what’s next?
A solid bounce from current levels could send gold up to $3,320, where the 100 SMA and Pivot Point intersect.
A break above that might even spark a run toward the triangle’s resistance trend line, especially if USD sentiment takes a hit.
But if gold breaks and holds below the 200 SMA, we could be looking at a slide toward $3,150 or even the S2 Pivot Point around $3,135. And given the structure, that would mark a significant shift in the precious metal’s momentum.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.