Market Recap
Gold prices have shown volatility in recent days, rebounding to $3,254/oz after hitting a one-month low of $3,155 earlier on May 15, 2025. The recovery was driven by a weakening U.S. dollar and technical buying, though bearish sentiments persist amid caution ahead of key economic data. For traders seeking to capitalize on these fluctuations, platforms like Exness offer leveraged trading in XAU/USD with competitive spreads.
Current Price Action and Trends
Price Level:
Gold is currently trading at $3,254/oz, consolidating after a sharp rebound from the $3,155 support zone.
Trend:
The medium-term trend remains bearish based on the USD’s inverse head-and-shoulders pattern completion and gold’s exit from a parabolic rally. However, short-term bullish momentum exists due to dollar weakness and technical corrections.
Key Levels:
- Support: $3,155 (critical psychological and technical level). A break below this could trigger accelerated selling.
- Resistance: $3,400 (previous consolidation range upper boundary). A breach here would signal renewed bullish momentum.
- Long-Term Target: Analysts project potential bearish pressure toward $3,100–3,195 if the downtrend resumes.
Trading Strategy for XAU/USD
Entry Points
- Pullback Entry: Enter short positions if gold rebounces to $3,250–3,300 (current consolidation zone), targeting the $3,155 support.
- Breakout Entry: Consider long positions only if gold breaks above $3,400 (resistance), though this is less likely given bearish forecasts.
Risk Management
- Stop Loss (SL): Place SL at $3,100–3,120 below the critical support to account for volatility.
- Take Profit (TP): Target $3,155 (immediate TP) or $3,100 (aggressive TP) for bearish trades.
Key Indicators to Monitor
- RSI: Watch for overbought conditions (>70) to confirm bearish reversals or oversold (<30) for potential pullbacks.
- Moving Averages: The 200-day MA (approx. $3,200) and 50-day MA (approx. $3,250) act as dynamic resistance/support levels.
Rationale for Strategy
- Bullish Drivers: Weaker USD and technical buying post-$3,155 bounce.
- Bearish Drivers: Overbought conditions, USD strength, and bearish patterns in gold.
- Volatility: Monitor Friday’s U.S. PPI data and Fed Chair Powell’s remarks for catalysts; avoid trades during high-risk news events.
Final Advice
Trade the downside breakout from the $3,250–3,300 pullback zone, setting tight stops below $3,155 to protect against false breakdowns. Prioritize risk-reward ratios of 1:2 (SL at $3,100, TP at $3,155). Avoid over-leveraging, as gold’s sensitivity to U.S. inflation data and Fed rhetoric remains high. For real-time execution, consider Exness’ MetaTrader platforms for low-latency trading.
