Gold Price Forecast: Bull Run Gains Momentum Amid Monthly Breakouts

Gold’s bull trend continued Wednesday with a new short-term trend high of 2,763. The day looks likely to end in the green and strong, in the top third of the day’s trading range. It follows a monthly bullish trend reversal signal that triggered yesterday on a rally above the 2,726-daily swing high and monthly high from December.

Yesterday’s closing price was the fifth highest daily closing price historically and the highest close since the 2,790 high from late-October. These are signs of improving demand that could lead to a new record high breakout for gold.

Next Target – 2,772

Nonetheless, gold is fast approaching a higher risk zone that could lead to a retracement given the gains from the 2,582 low (C). It would be healthy for the advance to take a rest and pullback or consolidate in preparation for a breakout attempt above 2,790. The next target zone is derived from a rising ABCD pattern that reaches its first target at 2,772. At that high gold will be up by 194.3 points or 7.5% from the 2,582 low.

This would put the performance of the current upswing around the average of the prior five upswings. The relationship between swings shows price symmetry or similarity. In other words, the chance of hitting resistance that leads to a stall or pullback increases once a similar target distance is approached. Those numbers are approximate and may vary somewhat by price or percentage, depending on the swing.

Double Monthly Bull Breakouts

Tuesday’s rally triggered a breakout of an inside month on the monthly chart as December’s high of 2,726 was exceeded. Moreover, today’s advance took back the 2,762 monthly high from November. Each rise above a prior monthly high is further evidence supporting the bull trend. Having breakouts of two monthly highs in two days shows the strength of demand behind this rally. A daily close above 2,762 will provide further bullish evidence.

The stronger the demand the greater the chance that the long-term bull trend can continue to advance by exceeding the current record high of 2,790. Nonetheless, this doesn’t mean the trend goes straight there. That is why it is important to watch price behavior around key price levels to gauge degrees of supply and demand and potential significance of a price level or range.

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