Gold Price Forecast: Hits Resistance, Eyes Key Support Amid Bearish Reversal

Gold rallied through its next higher target of 2,754 on Wednesday before hitting resistance at 2,758 and turning down. It is set to complete a bearish reversal day as the subsequent decline took gold below yesterday’s low of 2,719. And it is on track to close below that price level thereby further confirming the short-term bearish signal.

This puts gold in a retracement mode and will likely lead to a deeper retracement unless there is a quick bullish recovery. At the time of this writing gold continues to trade near the lows of the day and is set to close in the lower third of the day’s trading range.

2,753 Target Leads to Selling

Although the 2,753-upside target was reached, and it seemed to have been recognized by the market, there are higher targets for gold that continue to have a chance of eventually being approached once a retracement is complete. There are a couple key potential support levels to be aware of on the way down. The first is the most recent breakout level at 2,686.

Following a bullish breakout a pullback will eventually occur and many times the prior resistance breakout level is subsequently tested as support. Since gold has triggered a bearish daily reversal only four days after the bull breakout, there is a good chance it will be revisited. Slightly below the prior breakout level is the 20-Day MA at 2,667.

Key Potential Support at 20-Day MA – 2,667

The 20-Day MA is a key near-term trend indicator for gold given how it has been recognized as support since the 20-Day line was recaptured on August 8. There were two subsequent periods of time where the 20-Day line was tested as support on multiple days, first in early-September and then again in the first half of October. Each time the 20-Day MA was held as support a bullish continuation followed. So, this means that the 20-Day MA is the maximum anticipated retracement currently. Moreover, a break below it would be bearish and could lead to a continuation of the decline.

250% Extension Leads to Bearish Reversal

As discussed previously, the 2,754 target is the 250% extended retracement of the decline that began from the March 2022 high of 2,070. It is an interim target prior to a higher target zone from 2,797 to 2,815. The top target price is the initial target from the recent breakout of a bull flag, while the range begins with a 200% extended retracement target measuring the decline from the 2011 top.

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