Gold Price Forecast: Decline Deepens, Eyes Key Support Levels

Gold continued its bearish retracement on Tuesday, with a new low of 2,590 before it encountered at least short-term support. Two key price indicators were broken on the way down, the internal uptrend line and a prior swing low, which is also a monthly low.

Gold looks like it will be closing weak, in the red and below the trendline. A daily close below the line improves the chance for an eventual retracement down to the previous breakout level around 2,532. Also, a daily close below the monthly low 2,602 would be bearish.

Second Week of Correction

A new record high of 2,790 for gold was reached two weeks ago. It was quickly followed by a pullback that continues. The weekly pattern was the giveaway. That week closed as a bearish reversal doji shooting star (not shown) and a bearish signal triggered last week. This week is the second week down and it shows no sign of reversing.

Gold is in a waterfall type decline that could certainly test lower prices before it is done. Bearish sentiment was recently reflected in the 20-Day MA recently crossing below the 50-Day after being above it since July 3. Moreover, a daily close below the 2,602 monthly lows may prolong the correction.

Monthly Price Levels

The monthly price patterns have significance as they impact on the shorter time frames. Today is the first instance in nine months of a prior month’s low being violated. Starting in March, gold progressed with a series of higher monthly lows and higher monthly highs, largely. That pattern was violated today and if the breakdown continues to be confirmed it could lead to a deeper and longer correction in the price of gold.

Lower Targets?

The 2,532-price zone has a good chance of being reached if downward pressure in the price of gold continues. There is also an interim price zone to watch around 2,557 to 2,551, consisting of the 20-Week MA and the 127.2% extended target for an intraday falling ABCD pattern. The 20-Week MA is a potentially significant support area as it last marked support in early-August. It has largely seen gold traded above it since October 2023.

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