After sliding lower from a multi-year high of 1764 on May 18th, XAUUSD (gold) is holding its ground relatively well.
The 1680 area is keeping the metal afloat, at least for now.
Pullbacks like this are to be expected, especially after rallying for two months straight.
If 1680 is all we see from gold sellers, I would even argue that this $80 pullback is shallower than expected given the recent $300 rally.
Regardless of what happens here, though, I still like XAUUSD higher in the long run.
That doesn’t mean that 1680 support won’t fail, but I would look to the 1630/40 area for a buying opportunity even if it does.
That’s because the uptrend that started in 2018 is very much intact.
I know many traders want to short XAUUSD because they feel its overextended, but those who do are going against the grain.
As of now, 1680 is support with a daily close below that exposing 1630/40.
We’ll either see XAUUSD consolidate between 1680 and 1760 for a bit before the next leg higher or this will turn into a larger pullback.
The uncertainty surrounding gold’s short term path is why I favor gold as an investment rather than a trade.
I’ve been saying this to DPA members for months.
Things like low-cost gold ETFs, mining stocks (my personal favorite), and of course, owning physical gold are all solid plays, in my opinion.
Combine any of those vehicles with dollar-cost averaging, and you have a recipe for long term profits, in my opinion.
But if you insist on trading gold, watch for a breakout from this consolidation.
A daily close above 1740/50 would expose 1800.
Such a breakout could even go on to challenge the metal’s all-time high just above 1900.
Alternatively, a daily close below 1680 would suggest weakness and would also open the door to 1630.
Either way, until the uptrend that began in 2018 fails, I continue to like the idea of buying dips or breakouts, such as the one that could materialize above 1740/50.
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