Gold prices rallied more than 3.8% since the start of December with XAU/USD rebounding off technical support early in the month. The recovery has stalled below the first lateral resistance and while the broader focus remains constructive, the risk remains for a deeper setback while below near-term downtrend resistance. These are the updated targets and invalidation levels that matter on the gold weekly charts heading into the FOMC interest rate decision tomorrow.

GOLD PRICE CHART - XAU/USD WEEKLY

Initial weekly resistance steady at the September lows at 1849 backed by key resistance / bearish invalidation at the 2011 high-week close / high-close at 1898-1909 – a close above this region would be needed to shift the broader focus back to the topside towards the 61.8% Fibonacci retracement at 1956. Weekly support steady at 1763 backed by the 100% extension at 1739- still an area if interest for downside exhaustion IF reached.

Bottom line: Gold’s 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. From a trading standpoint, the threat remains for a deeper setback while within this formation but we’re ultimately looking to confirm a low in the weeks ahead with a test of 1739 or a close above 1909 to offer fresh opportunities for the broader gold price rally. Stay nimble into the FOMC tomorrow. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

Reference by: Michael Boutros, Currency Strategist with DailyFX