While a rally looks like a labored event, the downside potential is clear. Fail at $4401.82 and traders face the possibility of a steep plunge into main bottom support at $4099.12, followed by the 52-week moving average at $4077.39.
The main range I’m studying is $3886.46 to $5602.23. Right now, XAUUSD is trading inside its retracement zone at $4744.35 to $4427.82. In fact, the market has been sitting in this range for about seven weeks. I don’t think we’ve hit the point where we can starting counting down a breakout move, but we’ll certainly be focusing on trader reaction and order flow on a test of $4744.35. This level could set the tone for the week, so keep an eye on it.
What I’m Watching
Gold is still in sell the rally mode. Support is holding but buyers are not committing at these levels. The area I keep coming back to is the longer-term 61.8% level at $4,427.82 sitting inside the short-term value zone at $4,495.33 to $4,401.82. That is the line this market has to hold. Lose it and the plunge into the main bottom at $4,099.12 becomes the conversation. Hold it and the door opens toward $4,744.35, which is the level I am watching most closely going into next week. Trader reaction and order flow at that level will set the tone. It has been a ceiling for seven weeks along with the pivot at $4850.68 and nothing in last week’s price action changed that.
The 10-Year U.S. Treasury yield and Fed rate expectations are the two levers that will decide this. Softer inflation data changes it. A clear signal that cuts are actually coming changes it. Neither one is showing up right now. Until one of them breaks in gold’s favor, this market grinds lower or goes nowhere. Patient money waits for value. Momentum money is getting punished. That is where we are.
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