Market Recap
Gold prices recently experienced significant volatility, retreating from record highs of $3,500 to $3,211 as trade tensions eased and USD strength returned. This bearish correction presents both risks and opportunities for traders. For those seeking exposure to gold’s price action, consider trading XAU/USD through Exness, a platform offering competitive conditions for precious metals trading.
Current Price Action and Trends
Price Level: $3,211-$3,370
Gold consolidates near critical levels after a 3% drop from April’s peak. Recent price action shows increased sensitivity to macroeconomic developments, with support at $3,200 and resistance near $3,350-$3,500.
Trend: Short-Term Bearish Correction
The recent sell-off from $3,500 reflects profit-taking and shifting risk sentiment, though the broader trend remains bullish. A bear flag formation may be emerging, suggesting a potential test of $3,200 before resuming upward momentum.
Key Levels:
- Support: $3,200 (psychological level), $3,180 (2019-2020 range)
- Resistance: $3,350 (50-day EMA), $3,500 (April all-time high)
- Long-Term Target: $3,425-$3,500 if upward momentum resumes.
Trading Strategy for XAU/USD
Entry Points
- Pullback Entry: Look for buying opportunities at $3,200-$3,250 if the RSI enters oversold territory (below 30). This aligns with the 50-day EMA and 2023 support zone.
- Breakout Entry: Enter long positions on a sustained close above $3,500, as this would confirm renewed bullish momentum toward $3,600.
Risk Management
- Stop Loss (SL): Place below $3,180 (for pullback trades) or below $3,450 (for breakout entries), accounting for recent volatility.
- Take Profit (TP):
- First TP: $3,350 (+$150-$300 from $3,200 entry)
- Second TP: $3,500 (if breakout occurs)
Key Indicators to Monitor
- RSI: Use the 14-period RSI to identify overbought (>70) or oversold (<30) conditions. Recent dip to 40 signals neutral momentum.
- Moving Averages: Watch the 50-day EMA ($3,350) and 200-day EMA ($3,150) as dynamic support/resistance levels.
Rationale for Strategy
- Bullish Drivers: Fed policy uncertainty, renewed trade tariffs, and geopolitical tensions could reignite safe-haven demand.
- Volatility: Today’s focus on Services PMI data and Fed Chair Powell’s speeches may amplify price swings. Anticipate increased volatility during key economic releases.
Final Advice
Trade Setup: Await a bullish reversal candlestick pattern (e.g., hammer or engulfing) at $3,200-$3,250 to trigger a pullback entry. Secure profits at $3,350, then trail stops above $3,400 to capitalize on potential upward momentum. Monitor the USD Index and Fed comments closely, as these remain critical catalysts.
Caution: A break below $3,180 would invalidate bullish assumptions, signaling a deeper correction toward $3,000. Maintain position sizing below 2% risk per trade to manage exposure during volatile sessions.
