Gold Price Forecast: Holds Near Highs but Faces Potential Bearish Reversal
Robert J. Williams
After a strong rally, gold is testing key resistance levels. A break below $2,891 could signal a deeper correction toward the $2,810–$2,813 support zone. This development comes as gold continues to show strength, consolidating near this week’s highs.
Gold’s Recent Performance
On Tuesday, gold reached a new high of $2,930 in the current short-term rally. This followed a bullish reversal from support and a swing low at $2,833 established last Friday. Additionally, the closing price of the past two days was above the 20-Day Moving Average (MA), now at $2,909, and it seems likely that today will follow suit.
At the time of writing, gold is trading in the top half of the day’s trading range, suggesting it may end the day similarly. However, a lower daily high and lower daily low will be established today unless the week’s high at $2,930 is reclaimed before the trading session ends.
Advance Completed a 78.6% Retracement
This week saw the completion of a 78.6% retracement, followed by a one-day bearish reversal signal today. This increases the likelihood that gold may experience another leg down in the correction before it concludes. So far, there has only been one leg down, ending at $2,833. Although the 20-Day line, previously dynamic support, was broken to the downside last Thursday, it followed the breakdown of another trending indicator, an uptrend line.
During the current advance, the 20-Day line failed as resistance. However, the rising trendline shows a successful test of resistance around the trendline, which previously marked dynamic support. If there is an advance above this week’s high, the trendline is a key area to watch for resistance.
Bearish Continuation Will Target $2,813
A bearish continuation of the one-day reversal signal will be indicated by a drop below today’s low of $2,891, triggering a bearish continuation. This will position gold to test the next lower target zone, around the 38.2% Fibonacci retracement at $2,813. The 38.2% retracement level coincides with the initial target for a falling ABCD pattern (purple) or zig-zag pattern, at $2,810.
Since two indicators mark a similar price target ($2,813 to $2,810), it becomes more likely to be reached and show signs of support. A deeper bearish retracement following a new trend high in gold should better prepare it to continue advancing if a new high is triggered again. In the short term, the bull trend had gotten extended and was due for a rest.
Implications for the Stock Market
While gold’s movements are crucial for investors, it’s essential to keep an eye on broader market trends. The sensex today and the dow industrials average are key indicators of global economic health. As gold holds near its highs, these indices can provide insights into investor sentiment and potential market shifts.
With the stock market experiencing fluctuations, understanding the dynamics between gold prices and indices like the dow jones industrial average live can help investors make informed decisions. The share market today is influenced by various factors, including gold’s performance, making it crucial to monitor these developments closely.
About Author
