Gold Price Forecast: Hits Record High but Risk of Pullback Increasing

Gold reached a new record high of 2,671 on Wednesday and it may end the day at its highest daily closing price ever. It is currently trading above Tuesday’s close of 2,657, but not by much. Nonetheless, it has reached a potential resistance zone from 2,650 to 2,660. In addition, there is a slightly higher target where resistance may be seen around 2,675.

Reached Potential Resistance Zone

There are two rising ABCD patterns that hit targets at 2,660. They mark a potential pivot level where resistance could lead to a pullback, or an upside breakout through the range signals a continuation of the bull trend. Since the 2,675-price level has almost been reached, it should be used as the high of the resistance range.

In the short-term gold may be getting extended as it has been up five days in a row and has reached overbought on the relative strength index (RSI) oscillator. This doesn’t mean a pullback will come before higher prices are reached in gold, but if today’s low of 2,650 is broken to the downside the chance of it happening increases.

20-Day MA is Key Support

If a pullback comes before new high the area around the 20-Day MA at 2,553 is a key support area. The 20-Day line was tested and held as support on many days since an August 9 breakout above the line. There are also higher price levels to watch for support, including this week’s low of 2,614 and the prior trend high of 2,600. Also, keep an eye on the short internal trendline that rises above the 20-Day MA.

Above 2,675 is 2,724

If the trend continues higher through the 2,675-target zone, gold may continue to the next higher target zone around 2,724. That price would hit an initial target from a large ascending ABCD pattern that begins from the February swing low. It represents the more significant price target discussed above as the pattern covers a longer period. Given the long-term base breakout in March, gold has the potential to retain its uptrend into higher price. What is not clear is the path it may take to get there.

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