Gold, Chart of the Week: XAU/USD bulls need to commit or face an avalanche of supply
- Gold is at an important crossroads in the bullish structure carved out over the last few weeks.
- A break of resistance this week will key critical or the bears will be back in control.

In last week's pre-open analysis, Gold, Chart of the Week: XAU/USD bulls eye a break of critical daily resistance, it was noted that there were prospects of a bull trend following the move out of the downside channel. However, the resistance needed to give:
Gold daily chart, live market
Last week, the price made the foundations for a breakout in the form of a W-formation. This is a reversion pattern whereby the price would be expected to revisit the support of the neckline as illustrated in the projected price trajectory in the above chart.
Should the neckline hold again, as it has in the past two adjacent formations, then the bulls will be in the runnings for a breakout in the coming days. To the upside, a break of $1,920 could be significant as it leaves the price imbalance towards $1,957 vulnerable ahead of $1,982.
On the other hand, should the bears commit at $1,885 or below, then the downside risk is to May 16 lows at $1,786:
As for positioning, net length in the gold market remains fairly sticky, with additional length added and modest shorts covering, analysts at TD Securities noted.
''Indeed, with the Fed's next moves well telegraphed, the cohort of discretionary traders who have become more prominent since the pandemic era, are reluctant to be shaken out with the post-September Fed path unknown amid growing recession concerns,'' they said.
''While this dynamic has seen gold prices remain firm in the face of a strong dollar and rising rates, we still think the yellow metal will ultimately succumb to the Fed's fight against inflation.''
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
Author

Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.





















