Gold Price Forecast: Bullish Potential Amid Consolidation and Key Support

Gold remains in a tight consolidation pattern as it has for the past nine days. The high of the range is at 2,364 (C), also a weekly high, and the low is 2,315. On Wednesday gold advanced to a three-day high of 2,357, once again testing resistance at the 20-Day MA. At the time of this writing gold is on track to close at its highest daily closing price in six days. An advance above 2,360 will provide an earlier bullish signal than a rise above 2,364.

50-Day Moving Average Trend Support

The 50-Day MA has been representing an area of support over the past week. If this week’s low of 2,315 fails to maintain support, gold is heading towards a retest of the recent swing low of 2,277. A break below there has it heading towards the earlier breakout levels at 2,212 and 2,195. An interim target is 2,239, which is the completion of a falling ABCD pattern. That target is a potential pivot where support might be seen. The extended ABCD target is down at 2,205, within the 2,212 to 2,195 price zone.

Weekly Bullish Breakout Above 2,364

An advance above the 2,364-price level also triggers a weekly bullish reversal from last week’s relatively narrow range week, if it happens before the end of the week. So far this week, gold is showing signs of strengthening on the weekly chart. If it maintains strength, it will close the week in the green with a bullish weekly setup. Maintaining support around the 50-Day MA is going to save the trend in gold. The purple 20-Day MA defined dynamic resistance of the upswing from the February 29 bullish breakout, while the new advance may use the 50-Day line as dynamic trend support.

A breakout above last week’s high does not mean that gold starts going straight up again. Although it may do that, the more likely scenario following the recent 23.5% rally, is further consolidation near the recent highs. Another critical price level on the way up will be 2,431, a prior record high from April 12. Resistance may be seen there again, but there is also a good chance that the price of gold breaks out through the price zone as it heads higher.

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