Analyzing Gold’s Recent Correction and Outlook

Gold Forecast Video for 24.07.23 by Bruce Powers

Gold’s retracement continued today as it fell below yesterday’s low of 1,965 before finding support at 1,957. That low exceeded the 61.8% Fibonacci retracement at 1,962 and almost reached the 78.6% Fibonacci retracement at 1,955. If gold falls below today’s low, the 78.6% price zone will be the next lower target. The more significant support areas are at the four-day low of 1,954, and recent swing low of 1,946 along with the 34-Day EMA at 1,948.

Recent Test of 34-Day Line Support is Bullish

The recent swing low at 1,946 represented a test of support of the 34-Day EMA. Arguably it was also a test of the 200-Day line. However, for now we’ll assume there could still be a more significant pullback that tests support of the 200-Day line. Before the current advance that line was tested as both support and resistance over a period of weeks, which emphasizes its significance as support and tells us that to maintain its bullish outlook gold should not fall back below that line and certainly not close below it.

Recent Correction Was More Significant and Longer Compared to the First Quarter

It is also telling that recently the 34-Day EMA moved close to the 200-Day EMA and almost touched thereby reflecting prices moving back towards the mean. Looking at a similar situation during the prior correction in the first quarter of this year, the lines got close but not as close as recently. The recent correction was more significant as the decline was 9.1% versus 7.8% in the first quarter. It was also longer, taking more than twice as long to bottom. Recently the correction was 40 days, and the prior was only 17 days.

Longer Correction Points to Potential for Stronger Rally

The point being that a more significant correction happened recently, and it took the shorter 34-Day line down to test support of the longer 200-Day line without it going below the 200-Day line. As gold looks to be setting up to make another attempt to eventually breakout to new historical highs, a longer preparation and more significant correction is going to be prepare it for a possible sling shot or very aggressive type move. This is not a prediction, but it is something to keep an eye out for.

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