Gold (XAUUSD) Price Outlook – Gold Continues to See Support Below

Gold Technical Analysis

The gold market has rallied a little bit in the early hours here on Monday, but at this point in time we have a situation where we are still in the middle of trying to sort out whether or not there is plenty of support at $3,200. I think ultimately gold will go higher, but part of what we’re seeing here is a reaction to the US dollar falling in early trading due to the debt downgrade. The debt downgrade of course is absolute nonsense. It’s the same downgrade that I believe S&P did 14 years ago. So, it’s basically just somebody very late to joining the party.

There will be the initial reaction, and it will be anti-dollar, but then we will settle back down and see the dollar pick up. So that part of the equation probably won’t favor gold necessarily, but there are plenty of other reasons why gold could go higher. There’s a lot of political instability right now. There are a lot of questions asked about whether or not we are entering a recession, and in a situation like that, both the gold and the dollar can go up. If we were to break below the lows of last week, then I think gold drops to the $3,000 level.

But overall, I’m still looking to buy on the dips. A break above the $3,275 level probably kicks off another attempt to break above the $3,500 level, but obviously that takes a lot of inertia. As things stand right now, I think we’re just basically in this pattern here going sideways trying to figure out which direction we’re going to go for the next $200.

For a look at all of today’s economic events, check out our economic calendar.