Gold Analysis Update (XAUUSD)

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• Gold has moved below the ascending trend line we highlighted earlier this week.  This is currently in the early stages of a breakout and a move below 1710 (the weeks low) would add further bearish weight to the current scenario and make the likelihood of a significant breakdown higher.
• A failure to sustain a breakout would bring the previous resistance area located around 1765 back into focus.  This has confluence with the 61.8% Fibonacci retrace of the prior major swing lower from September to December 2011.
• The bearish engulfing candle from 3/2/2012 is yet to be invalidated and could still see price moving lower.
• The 23.6 Fibonacci retrace level from the prior swing is located just below the current level and is a potential obstacle in the event of a breakout below support (horizontal price structure).
• The dollar index (USDX) broke through weekly low support and subsequently bounced to the upside after moving close to the Fibonacci confluence around 78.30.  A USDX continuation to the upside would be supportive of XAUUSD downside price action. WE would prefer to see some of the lower highs be takeout on USDX as price has been overtly bearish this week.
• While the longer term trend is certainly to the upside the near term price action has seen a consolidation phase and the gold analysis outlook is less than clear.  A resumption of the bullish trend would however potentially be triggered on a sustained break above 1765.

Gold Daily Chart Analysis

Gold 4 Hour Chart Analysis