Gold Price Forecast: Faces Resistance at New Rally High of 2,462

Gold reached a new rally high of 2,462 on Thursday, where it encountered resistance that turned it back down. It is on track to possibly close with a bearish shooting start candlestick pattern. Today’s high exceeded the 2,450-resistance zone from the May swing high, but it could not retain strength. This will likely put gold at risk of a deeper pullback before testing the 2,484-record high. The low for the day at the time of this writing was 2,430, and gold may fall further today as it continues to trade near the lows of the day.

Break of 2,430 Support Points Lower

A decline below today’s low of 2,430 triggers a likely deeper pullback. The first lower target would be around the 20-Day MA at 2,407. That line was recognized as resistance last Friday and this Monday before gold broke out above the line on Tuesday. And it closed above the line thereby confirming the bullish move.

So, it would make sense for a test of the 20-Day line as support before gold is ready to challenge the 2,484-record high. If the 20-Day line fails to hold as support, the 50-Day MA will be next on the agenda, currently at 2,362. It was successfully tested as support last Thursday and it should do so again.

Weekly Pattern Remains Bullish

On a weekly basis, gold triggered a weekly bullish reversal this week as it rallied above last week’s high of 2,432. A weekly close above that price level tomorrow will confirm the breakout. Overall, the weekly chart indicates that gold is likely to progress higher. However, it could do that after a deeper pullback or a new short-term consolidation phase.

There remains a technical argument for a failure scenario where gold continues to encounter resistance that eventually leads to another test of support around the bottom of the recent consolidation pattern. And it may not hold, which could lead to a sharp reversal from a relatively large topping pattern. This is not a prediction, just something to be aware of as a possibility.

Recent Signs of Strength

Gold is showing overall improving strength that can be seen in price structure. Notice that the most recent swing low (C) is higher than the prior swing low from late-June (A). A sign that the uptrend continues to progress. An uptrend consists of a series of higher swing lows and higher swing highs. And the swing low was confirmed as support by the orange 50-day MA, and internal uptrend line.

What is interesting is the relative performance of the corrections. There were two previous corrections in gold following the April swing high. The first saw a decline in the price of gold of 6.3% and the second was 6.7%. The most recent correction ended after only a 5.3% decline.

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