Where are the gold bugs?
Spot gold (XAU/USD) seems ready to extend the long-term trend after touching some technical support levels.
Do you think the precious metal will see new record highs this week?
Gold (XAU/USD) Forex 4 Hours Chart by TradingView
In case you missed yesterday’s headlines, the lack of high-level data releases enabled markets to catch a breather from the previous week’s extended moves.
However, JPow had his moment in the spotlight. In one discussion, he supported further interest rate cuts but also revealed that he only sees an additional 50 basis point cut through the end of the year. This is less pessimistic than the markets were pricing in, and may be why the US dollar was higher in pips against its counterparts.
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven’t done your homework on the US dollar and gold yet, it’s time to check the economic calendar and stay up to date with daily fundamental news!
The XAU/USD pair, which hit new highs near $2,685 last week, rose to $2,630 levels. This is where the Fibonacci retracement levels and the S1 pivot point line are located! Notably, current gold prices are not too far from trend line support that has remained steady since early September.
Green candles and sustained trading above the $2,630 area puts XAU/USD on a journey back to previous highs at $2,680. If there is a fundamental driver behind the upward momentum, the yellow metal could reach new highs.
Of course, the XAU/USD pair can still extend its downtrend. Look for continued trading below the $2,600 levels, which would place the commodity below the 38.2% and 50% Fibonacci levels, the S1 pivot point, and trend line support. Continued trading below the potential support zone may attract golden bears who may drag the XAU/USD pair to potential inflection points such as $2,580 or $2,525.
Whichever way you decide to run this setup, be sure to practice proper risk management and check out our currency correlation tool!