FX.co ★ MMC | XAU/USD, GOLD

Gold is currently trading around $4,398 on the daily chart after being rejected at the August peak of $4,665. An SMC view of the chart indicates a shift from bearish distribution to recovery mode. Previously, several bearish BOS formations occurred from March to June. Selling pressure eventually formed support in the $4,000-$4,130 region. Rejection came strongly from this support level, and buyers built a base and changed the market structure. The first SMC signal is the bullish CHoCH signal at the $4,130 level. Price has been making lower highs and lower lows, but buyers triggered a bullish CHoCH signal by breaking the prevailing bearish order flow. The next signal would be a bullish BOS when Gold moves above the internal structure at $4,300 and pushes prices toward $4,665. Institutional buying was triggered after accumulating liquidity below the June lows. After that, the August rally moved to buy-side liquidity at $4,665. Price traded above nearby structure but was rejected afterward. This rejection shows that liquidity had already been taken out above previous highs before selling pressure came in. A supply area sits above current price levels, extending up to $4,930. The upper level is labeled as a Strong High. So, $4,665 is the first liquidity target for the next bullish move, while $4,930 is the bigger external liquidity target.

Currently, gold is retracing toward the $4,330-$4,400 level after failing to hold the August highs. These levels are critical from an SMC point of view since they can serve as the mitigation levels for the current bullish displacement. A rejection from lower levels would mean that the buyers are protecting their structure. If bulls respond with a BOS breakout above $4,465, it will make the continuation setup more robust and could take price toward $4,600 and then $4,665. The bearish outlook would take hold if price closes decisively below $4,330 and establishes a bearish BOS. This move would sap the momentum from the existing bullish order flow and put price in a position to test the support at $4,265. If price slips below $4,265, it will shift focus to the $4,130 CHoCH area. A break below $4,130 would be important, as it would invalidate the bullish formation that drove the move up. Price will thus fall back to test the $4,000 demand level. Macro Gold is still reacting to Fed expectations, US Treasury yields, the US Dollar, inflation numbers, and risk sentiment. Lower yields and a lower USD can drive liquidity into gold and push it higher toward $4,665. Higher yields will put more pressure on supply and accelerate the correction process. Overall, SMC remains bullish on structure as long as $4,130 does not break. The main near-term fight takes place between $4,330 demand and $4,465 resistance. A bullish BOS above $4,465 will point to continuation higher towards $4,665 and $4,930.