XAU/USD outlook: Gold surges to $3.500

Slobodan Drvenica Windsor Brokers

XAU/USD

Gold skyrocketed since Monday’s opening ($3333) and hit $3500 on Tuesday morning, advancing 5% in slightly more than 24 hours.

It seems that rally since the start of the year is unlikely to slow but continues to accelerate (gold was up around 33% from January 1 until today) as conditions continue to deteriorate that fuels demand for safe-haven yellow metal.

Many analysts saw $3500 level as target for this year and I joined these expectations, anticipating that euphoria over Trump’s radical measures was about to start fading, with expected peace talks in Ukraine, adding to scenario.

However, recent waves of trade tariff stories, particularly on deepening crisis between the US and China, world’s two largest economies, and Trump’s latest attempt to fire the first man of the US Federal Reserve that strongly undermined investors’ confidence in the US economy, sparked further migration into safety, which shows no signs of ending so far.

Touch of $3500 was followed by sharp pullback, partially due to significance of this level, but more due to strongly overbought daily studies which warn that bulls may take a breather for consolidation and positioning for renewed attack at $3500 barrier.

Monday’s high ($3430) and today’s session low ($3412) mark initial support, along with psychological $3400 level, which should ideally contain pullback and keep larger bulls intact, while loss of $3400 handle would signal deeper correction, and expose supports at $3350/$3330 and $3300.

Res: 3466; 3500; 3521; 3535.
Sup: 3430; 3412; 3400; 3450.

Interested in XAU/USD technicals? Check out the key levels

1. R3 3561.79
2. R2 3496.2
3. R1 3460.3
PP 3394.71
1. S1 3358.81
2. S2 3293.21
3. S3 3257.32

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.