Gold Price Forecast: Hits $2,955 Record High, but Momentum Weakens

Gold continued its advance to a new record high of $2,955 on Thursday but at a muted pace. Similar behavior was seen on Wednesday, as gold is likely to end the day with a relatively narrow range and a bearish position within the day’s trading range, which was $2,924 to $2,955.

Although there was a higher daily high and higher low established today and for the past three days, yesterday’s closing price was below the top boundary line of the pennant and today may end the same. At the time of this writing, gold is trading in a relatively weak position in the lower third of the day’s trading range.

Second Low Momentum Day

Since this is the second day following a bullish breakout signal for a pennant pattern, and there is little sign of buyers jumping in, the pattern remains at risk of failure. Today’s low is near-term support and if it is undercut a drop towards the lower region of the pattern becomes possible. Another bearish signal triggers below yesterday’s low of $2,919. Since the bottom boundary line is dynamic, last Thursday’s low of $2,900 and this Tuesday’s low at $2,892 can help guide.

Above $2,892 Shows Strength

Nonetheless, a drop below $2,892 increases the chance that the bull pennant breakout has failed. If correct, a decline through the bottom of the pennant becomes possible. Other key potential support levels begin with the bottom of the pennant and a minor interim swing low is at $2,864. Notice that the important trend indicator, the 20-Day MA, is nearby to that swing low at $2,854 and rising.

The 20-Day MA represents the more significant potential support level. Notice that it has not yet been tested as support since it was reclaimed on January 7. This would seem to indicate that it has a good chance of being tested as support on a deeper pullback, at a minimum. Further down is the prior trend high and now a potential support zone at $2,790.

Upside Targets

On the upside, the next higher price target is $2,961. It is followed by potential resistance at $2,982 and then $3,012. With only one day remaining in the week, the closing position of gold within this week’s trading range may offer insights into its potential direction for the following week.

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