GOLD : 2021 Breakout

(Wed, 6 Jan 2021). Gold prices have surged more than 2.6% into the 2021 open with a breakout in XAU/USD soaring to multi-week highs. The rally takes gold into the first major objective at Fibonacci resistance and we’re looking for inflection here in the coming days for guidance. These are the updated targets and invalidation levels that matter on the gold weekly charts heading into the Georgia Senate run-off elections and US Non-Farm payrolls later this week.

GOLD PRICE CHART - XAU/USD WEEKLY

Notes: In my last Gold Weekly PriceOutlook we noted that the XAU/USD, “recovery off confluence support is entering its third week and challenging the first lateral resistance level at 1849- watch the weekly close with respect to this threshold.” A topside breach into the close of the year fueled a rally into downtrend resistance at the 2011 high-week close / high-close at 1898-1909- this level is being challenged into the 2021 open with a breakout early in the week keeping the immediate focus higher in gold.

The rally is now approaching the first major resistance objective at the 61.8% Fibonacci retracement of the August decline / November high at 1956/65- a breach / close above this threshold is needed to keep the immediate long-bias viable towards subsequent topside objectives at the 200% ext / high-week close at 2033/35. Weekly support now rests back at the yearly open at 1898 with a close below 1849 needed to once again threaten key support at 1763.

Bottom line: The gold price breakout is already approaching the first major resistance objective and the focus is on possible inflection off this threshold. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of 1956 – be on the lookout for downside exhaustion ahead of 1898 on pullbacks IF price is indeed heading higher with a breach here exposing the record high-week close. Stay nimble into the monthly open here with major event-risk likely to fuel increased volatility in the days ahead. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

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