- Summary:
- After dropping to its lowest level in 3 months, XAUUSD has retraced some of its losses to the 50% Fib level and previous low.
XAUUSD dropped to its lowest level in three months at $1,448.13 in yesterday’s trading before finishing the day at $1,455.46. The precious metal has been trading within a tight range between $1,454.55 and $1,456.70 in the Asian session.
Yesterday’s drastic decline was more technical than fundamental with XAUUSD falling below support at $1,452.54. There was also a lack of economic reports from the US as it was Veteran’s Day.
We could see continued volatility on the precious metal today with US President Donald Trumo making a speech at the Economic Club of New York at 5:00 pm GMT. He is widely anticipated to comment on developments about the US-China trade deal. Remember that most of gold’s recent losses was due to optimism that the US would soon begin rolling back its tariffs on Chinese goods. We have since heard conflicting statements from the US, with President Trump saying that no deal has been agreed on yet.
Technical Outlook for Gold
Using the Fibonacci retracement tool and drawing from yesterday’s high at $1,466.22 to yesterday’s $1,448.13, we can see that XAUUSD has pulled back to the area around $1,456.70, between the 38.2% and 50% Fib levels. The precious metal has also found support at this price back in November 8 and October 1.
I’m expecting a breakout during the European session as more market participants come into play. If risk appetite dominates today’s trading and if President Trump provides positive developments on the US-China trade deal, resistance at the 50% Fib level could hold. We may soon see XAUUSD hit new monthly lows around $1,438,81 where it established highs in June to July. An alternative scenario would be for risk aversion to dictate sentiment and gold could rally to resistance at $1,514.50 around its highs for October.Download our latest quarterly market outlook for our longer-term trade ideas.