Gold: technical analysis
Gold has so far been trading within an expanding bearish trend. XAU/USD surged on Monday forming a very bullish candle which closed at the highest levels since late October. However, the metal’s advance has stalled at the downtrend resistance line.
Technically XAU/USD still hasn’t reached the targets of the weekly triangle which has been breached to the downside at the end of summer – these targets lie in the 1085/1050 area.
It means that the bulls have to make the pair close the week at least above 1200.50 (last week’s opening level) to confirm a bullish engulfing pattern on the weekly chart. Even so, the negative pressure will lift only above June low at 1240.50 and October high at 1255.10.
On the downside the key level to watch is 1180.00 – a slip below this support (2013 low) will make XAU/USD return to the recent lows in the 1140 area and then probably resume the downtrend if this bottom is breached to the downside. Although there’s some improvement in the technical indicators, we recommend watching for 1180.00. And also keep an eye on the economic calendar: tomorrow is the NFP Friday which may trigger a move in gold price.