Gold Price Forecast: Declines After Hitting Resistance Near Recent Highs

Gold advanced to a high of 2,529 on Friday, just shy of the 2,532-record high and completed another test of resistance at the top of a narrow 14-day price range. Resistance was seen following the 2,532 high, leading to an intraday pullback. It looks like gold will end the day week in a bearish position in the lower half of the day’s trading range. But that may not matter much given the chart pattern.

Remains Within Tight Price Range

Not much has changed today as gold remains within a narrow range from 2,471 to 2,532. Until it breaks out of that range volatility will continue to be muted. The trend is up on multiple time frames indicating an upside breakout is likely if demand can pick up. Nevertheless, that doesn’t mean a decline won’t come before an upside breakout.

Given the current consolidation pattern an upside signal will be given on a rally above 2,532. The highs of the range have been tested for six of the 14 days that it has been forming, including today. So, the highs of other days won’t provide a more confident scenario for an earlier indication of a possible breakout above the high.

Drop Below 2,471 May Lead Lower

A deeper pullback than what has been seen since the bullish breakout of a symmetrical triangle pattern three weeks ago becomes likely on a drop below 2,471. The top line of the triangle represents support and should also be watched as it may represent a slightly lower price, depending on when reached. If gold falls back into the triangle pattern there are possible support areas around 2,450, a prior swing high, and the 50-Day MA at 2,439, currently.

Another Failed Breakout Attempt

Thursday’s advance showed the potential for gold to continue to strengthen and possibly challenge the 2,532 high. A daily bullish reversal triggered as gold broke out above Wednesday’s doji hammer candlestick pattern. And gold closed strong on the day, in the upper third of the day’s range. There was also a successful test of support at the purple 20-Day MA as the low of the day at the hit it. However, today’s price action negates the potential. Also, keep an eye on the weekly chart. During the past two weeks gold has traded inside the range from two weeks ago, possibly setting the stage for a spike out of the consolidation pattern.

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