Gold Breaks Out- Bulls Eye Record High

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Gold prices are poised to mark a third consecutive daily advance with XAU/USD clearing the June opening-range on news of war breaking out in the Middle East. The breakout takes price into uptrend resistance and while the broader outlook remains constructive, the immediate advance may be vulnerable while below this slope.

A rally of more than 1.7% extended into uptrend resistance at the median-line before pulling back and the immediate focus is on today’s close with respect to the record high-close at 3431. Risk for near-term inflection off this zone with a close above needed to mark uptrend resumption. Subsequent resistance objectives are eyed at the record high at 3500 and the 100% extension of the May rally at 3578- look for a larger reaction there IF reached.

Initial support now rests back at the 61.8% retracement of the April decline / the record high-day close (HDC) at 3355/80- losses should be limited to the median-line IF price is heading higher on this stretch. Subsequent support seen at the May / June open at 3288/89 with bullish invalidation now raised to the May LDC / late-May swing low at 3240/45- a close below this threshold would be needed to suggest a more significant high is in place / a larger reversal is underway.

Bottom line:
The gold rally has extended into uptrend resistance at the median-line- risk for possible inflection / topside exhaustion into this slope. From a trading standpoint, losses should be limited to 3355 IF price is heading for a breakout with a close above the median-line needed to fuel the next major leg of the advance.

Keep in mind we get the release of key interest rate decisions from the Bank of Japan, the Federal Reserve, and the Bank of England next week. The ongoing conflict in Iran adds an additional layer of event risk as gold presses record highs- stay nimble next week and watch the weekly closes for guidance here.

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