Gold Price Forecast: Counter-Trend Gold Rally Nears Crucial 50-Day MA Test

Gold rallied to a high of 2,655 on Wednesday as the counter-trend rally continued. It is on track to complete a new higher daily high and higher low today, and it looks like the close will be in the top third or so of the day’s trading range. The low for the day was 2,619. However, potential resistance around the 50-Day MA, now at 2,659, looms just above. And the 50% retracement sits a little higher at 2,662.

Shows Strength Heading Towards 50-Day MA

Nonetheless, today’s advance showed strength by rallying above the internal uptrend line. Strength will be confirmed on a clear daily close above it. Since the slightly higher 20-Day MA (purple) has been falling, it is getting closer to the 50-Day line (orange). Therefore, it might be more useful to look at the next higher potential resistance zone above the 50% retracement as a price range from 2,680 to 2,692. There are three levels close together. The 20-Day MA is at 2,680, the peak from September is at 2,686, and the 61.8% Fibonacci retracement is at 2,692.

Recovery from Last Week’s Decline May Take Time

During the decline last week gold fell through several price levels that helped define potential support for the near-term uptrend. The current counter-trend rally will now likely test some of those price areas as resistance. This is typical behavior following a breakdown through a price level that helped define the rising near-term trend.

Prior areas of potential support are approached from below to see if those price areas see resistance. Once resistance is encountered that leads to a bearish reversal, at least a pullback is likely. Moreover, a more decisive bearish reversal could lead to a retest of recent lows or lower prices.

Today’s low at 2,619 is near-term support. A drop below it would change the pattern of three consecutive highly daily highs and higher lows. It could be a warning of lower prices to come or see a quick rebound after a minor drop.

Recent Low at 20-Week MA Support

Considering the weekly chart (not shown), it shows for this week and last week around the 20-Week MA. That is a weekly trend indicator that has done a good job of marking support for the rising trend since October 2023.

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