Gold prices rallied more than 1.2% since the start of the week with XAU/USD rebounding off multi-month trend support. The advance keeps price within a multi-week contractionary range however with the immediate focus on a break of the September opening-range for guidance. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts in the days ahead.

GOLD PRICE CHART - XAU/USD DAILY

Technical Outlook: In my last Gold Price Outlook we noted to, “be on the lookout for possible downside exhaustion into the lower parallel / ahead of 1876 IF the broader long-bias is to remain viable.” XAU/USD briefly registered a low at 1863 the following day before rebounding with price still in consolidation within this range three weeks later.

Monthly open resistance stands at 1968 with a breach / close above the September opening-range high/ 61.8% Fibonacci retracement at 1992/94 needed to mark resumption of the broader uptrend. Initial support rests with the 2011 high at 1920 with a break of the monthly range lows exposing the August low at 1863 and the 38.2% retracement at 1837.

GOLD PRICE CHART - XAU/USD 120MIN

Notes: A closer look at Gold price action sees XAU/USD consolidating just the above slope support with a break of the weekly opening-range high fueling a near term recovery. Initial resistance stands at 1967/74 and 1994- both areas of interest for possible topside exhaustion IF reached. Ultimately a break below the 2011 high-day close at 1876 is needed to suggest a larger correction is underway.

Bottom line: Gold is approaching the upper bounds of the race and consolidation range and we’re looking for a reaction just higher. From a trading standpoint, look for topside exhaustion ahead of 1994 if prices are indeed heading lower with a close below 1920 needed to shift the focus back to the downside. Review my latest Gold Weekly Price Outlook for a closer look at the longer-term XAU/USD technical trading levels.

Reference by: Michael Boutros, Technical Strategist with DailyFX