Gold Price Forecast: Consolidates, Poised for Potential Breakout

Gold continued to consolidate on Wednesday with a minor sign of strength as it rose above Tuesday’s high of 2,371. Nevertheless, it remains within a relatively tight trading range between resistance of 2,393 and support around 2,349. Until there is a decisive move outside of that range, trading will remain choppy.

Bullish sentiment remains dominant however as the consolidation pattern is developing above the 50-Day MA and other lines that recently had been areas of resistance. This reflects the improving underlying strength in demand for gold.

May End with an Inside Weed

Since the Wednesday trading session is almost over, it looks like gold could finish this week with an inside week. If so, it would set up a potential bullish breakout of an inside week for next week. Of course, volatility following the release of the U.S. consumer price index (CPI) tomorrow could trigger a breakout of the current price range. If bullish signs continue thereafter then gold has a chance to keep rising. Although there hasn’t yet been bullish follow through, last week gold closed at 2,393,

above the interim daily swing high of 2,388. That showed strength that is waiting for further confirmation.

Last Week’s High of 2,393 is Key Pivot

Last week’s high of 2,393 presents the next key pivot as a rally above there puts gold on track to challenge May 20 record high of 2,450. The steadier the climb towards that high the better the chance that it can continue to rise on improving momentum. An extended retracement of the August 2011 decline presents the first long-term Fibonacci target at 2,462. It is followed by another long-term target at 2,480.

That is the completion of a measured move or rising ABCD pattern that begins from the August 2018 swing low of 1,160. The subsequent advance from the September 2022 swing low matches the first upswing from the 2018 low at 2,480. Long-term targets deserve to be watched to see how price behaves around the levels. They present points of decision where resistance may be seen, or a breakout could occur from the potential resistance area.

Second Breakout of Monthly on Deck

Gold should see an upsurge in momentum upon a rise above last week’s high as it will trigger the second breakout above a monthly high as well. June’s high of 2,388 was exceeded earlier and a second breakout may have clearer success.

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