Gold Price Forecast: Faces Key Resistance at 2,529 Amid Consolidation Battle

Once again gold tests recent highs for resistance on Wednesday. It was rejected from the day’s high of 2,529. That level is close to the record high reached three weeks ago at 2,532. Nonetheless, for the fourth week in a row gold has attempted to break out above the high and continue its bullish trend.

Again today, resistance was seen from the high leading to a likely close for the day in the red and in the lower half of the day’s trading range. Support for the day was seen at 2,501. This behavior shows the 20-Day MA at 2,505 continuing to point to short-term trend support.

Ascending Triangle is Forming

There seems to be two ways to look at the recent tight consolidation pattern. Either as a rectangle or a rectangle with a developing ascending triangle pattern inside. If the triangle is to play out there is the potential for a sharp upside breakout above 2,532. And if the integrity of the triangle is the be maintained a breakout, or failure would likely occur within the coming five days, which is when the two boundary lines of the pattern will intersect.

After that, either the 2.30 level will have been busted on the upside or the small uptrend line at the bottom of the ascending triangle will have failed to hold as support. A drop through support of the line would first mean another test of support at the top of a symmetrical triangle pattern (purple). A little lower is the 50-Day MA at 2,449.

Bias to Upside, But Watch the Backside

Although the bias remains to the upside given that an uptrend is present on multiple time frames, the longer gold consolidates the risk of a failure to move higher remains. As noted above, the 50-Day line is a key price indicator for the trend. Gold bounced off it at the two bottoms in July and August thereby confirming its significance. Therefore, it should hold as support during weakness and if it does not, that is a warning sign.

Price Contraction Resolves to Expansion

Due to the contraction in the price range seen over the past month there is the potential for a sharp breakout of the current price range. The high of the range is 2,532 and the low is 2,471. A decisive rally above 2,532 has gold heading next to 2,566. That target is the 161.8% extended target of a measured move from the 2022 lows.

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