[GOLD 08.05.2025] Navigate Volatility: Strategies for XAU/USD Trading

Discover the latest insights on gold prices and trading strategies in our market recap. As gold hovers near key support levels and faces volatility, learn effective entry points, risk management techniques, and the factors influencing its movement. Stay ahead with expert analysis, including price targets and essential indicators to monitor. Perfect for traders looking to maximize their opportunities in the XAU/USD market amidst geopolitical tensions and central bank dynamics.

Market Recap

Gold prices have experienced significant volatility in recent days, marked by a sharp drop from record highs in early May 2025. As of May 8th, gold is trading around $3,390, slightly trimming earlier losses but still pressured by a resilient USD and cautious Fed policy. For traders seeking opportunities in this dynamic market, Exness offers competitive trading conditions for XAU/USD, including tight spreads and reliable execution.

Price Level:

Gold is currently hovering near the $3,350 psychological support level, having dropped from two-week highs of $3,435 due to profit-taking and USD strength.

Trend:

The short-term trend has shifted to bearish following the breakdown below the parabolic structure and a failed attempt to reclaim the $3,435 resistance. Long-term fundamentals, however, remain bullish due to central bank demand and geopolitical risks.

Key Levels:

  • Support: $3,350 (psychological level) and $3,223 (May 2 low)
  • Resistance: $3,435 (recent high) and $3,494 (channel support-turned-resistance)
  • Long-Term Target: $3,500 โ€“ $3,600 (April 2025 all-time highs and UBS target)

Trading Strategy for XAU/USD

Entry Points

Pullback Entry: Look for buying opportunities on dips toward $3,350, provided the RSI remains above 50 (currently near 61.50). A hold above this level could trigger a rebound toward $3,400.

Breakout Entry:
A sustained close above $3,435 would invalidate bearish momentum, potentially targeting $3,494 resistance.

Risk Management

Stop Loss (SL):
  • Bullish trades: Place SL below $3,310 (3% risk) to account for volatility.
  • Bearish trades: SL above $3,470 (2.5% risk).

Take Profit (TP):

  • First TP: $3,400 โ€“ $3,410 (strong prior support zones)
  • Second TP: $3,435 โ€“ $3,494 (resistance and channel target)

Key Indicators to Monitor

  • RSI: Watch for divergence or a drop below 50 to confirm bearish momentum.
  • Moving Averages: The 21-day SMA ($3,283) served as critical support; a break below could accelerate declines.

Rationale for Strategy

Bullish Drivers:
  • Safe-haven demand amid escalating US-China tariffs and Fed uncertainty.
  • Physical buying from central banks and ETFs, which pushed gold up 29% YTD.

Volatility:
High due to Fed policy statements, geopolitical developments, and leveraged positioning.


Final Advice

  1. Trade Direction: Prefer longs on dips to $3,350 with tight stops, as the RSI suggests buying interest persists.
  2. Execution: Enter partial positions now and scale in if $3,350 holds; avoid breakout trades until $3,435 is reclaimed.
  3. Catalysts: Monitor Fed comments on inflation/unemployment and US-China trade negotiations.

Goldโ€™s intraday setup favors scalping strategies with defined risk. Tighten stops once the first TP is hit, and let secondary positions run toward resistance levels.

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