The overall weakness of the US dollar helped push spot gold prices to multi-week highs.
Is the technical resistance level a trigger for a downtrend in the commodity?
Or will we see a launch in the next few days?
Gold (XAU/USD) 4 hours Chart by TradingView
In case you missed it, speculation about a Fed rate cut has weighed on the US dollar for much of this week.
Spot gold, a popular alternative to the dollar, has continued its upward trend that began in late June, now trading near the $2,400 area.
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on gold and the US dollar yet, it’s time to take a look at the economic calendar and stay up to date with the daily fundamental news!
Note that the $2400 level is close to the R1 pivot point line ($2416) on the 4-hour time frame. More importantly, it is close to a resistance level that has held twice since April.
Are we witnessing the end of the bullish trend in XAU/USD? The pair is already showing long wicks around the resistance level R1.
Sustained trading below $2400 followed by bearish candles could help push XAU/USD towards the mid-range area and the pivot point at $2367. If fundamentals inspire bearish momentum, we could see XAU/USD retest the support area at $2290.
Of course, gold lovers may be taking a break. Look for bullish candles above the R1 and R2 pivot lines, which could lead to the XAU/USD pair breaking out of its months-long range.
Good luck and good trading this one!