Gold prices are still hovering around support at $1,459.00 where the precious metal established lows on October 1. XAUUSD slipped to a new three-month low at $1,445.35 before recouping some of its losses. As of this writing, it’s trading around $1,465.45.
Resistance at the 38.2% Fib level to hold?
Using the Fibonacci retracement tool and drawing from the high of November 1 to last week’s lows, we can see that XAUUSD looks to have bounced off resistance at the 38.2% Fib level around $1,472.00. The precious metal has also found support at this area in October.
Friday’s candlestick closed as a hanging man which could suggest that XAUUSD may soon retest its three-month lows. A break below $1,445.35 means that the next support level will be around $1,382.70 where the precious metal found support in July 2019.
If not, look for resistance at the 61.8% Fib level.
On the other hand, the 4-hour time frame suggests there’s potential for a higher pullback. The chart shows that XAUUSD made a higher low after two consecutive lower lows which is consistent with an inverse head and shoulders chart pattern.
Should risk aversion trigger a flight to safety, XAUUSD could trade higher and test neckline resistance at $1,474.40. A strong bullish candlestick above this level could mean that the pullback in gold could reach to the 61.8% Fib level at $1,488.47. If it does not hold, the next resistance level for the currency pair will be around $1,500.69 at the falling trend line from the highs of September 4 and November 4.Download our latest quarterly market outlookfor our longer-term trade ideas.
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