Gold Price Forecast: Breaks Support Levels, Risk of Further Decline

Gold sold off again on Thursday as it fell below several points of potential support to reach a low of 2,332. Trading continues near the lows of the day and gold may continue lower. Several trendline support areas failed to halt the decline and the 20-Day MA was broken to the downside.

Further, it looks like the daily close may come in below the 20-Day line. Today’s low is also a weekly low from last week. If gold falls below last week’s low and stays there, a bearish weekly reversal will be triggered. How gold does or does not follow through from there will be key.

Watching 50-Day Moving Average

If a more significant retracement than what was seen most recently is beginning the 50-Day MA will be the next key test of support at 2,306. Gold has traded above the 50-Day line since the acceleration in momentum following a symmetrical triangle breakout on February 29. If it is busted to the downside there is a good chance that the recent 2,277 swing low support is broken. That can easily lead to a test of support around 2,195, which is a prior swing high. Further down is the prior swing high at 2,135.

This Week’s High Completes a 23.5% Advance

As of this week’s high of 2,450 gold was up by 465.80 points or 23.5%, when measured from the mid-February low of 1,984. Today’s price action indicates that the risk of a deeper correction since the mid-February 1.94 bottom is increasing. There were three trendlines that cross just above the 20-Day MA that created a potential support zone. That zone failed today as gold dropped through each one. Further, the near-term trending indicator, the 20-Day MA, was attempting continue to represent dynamic support for the uptrend as gold dropped below it recently and then rallied back above it.

Today’s High of 2,384 is Near-term Resistance

On the upside, a minimum rally above today’s high 2,384 would be needed for the first sign of strength. That should be followed by a daily close above that level. Nevertheless, as stated above, the preference next for gold seems to be leaning more to the downside than the upside.

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