Gold Price Forecast: Holds Above Key Support, Poised for Potential Upside Breakout

Gold continues to consolidate near recent record highs on Wednesday, as it awaits an improvement in demand that can take it higher. The recent record high of 2,532 is the key price level to watch to signal an upside breakout and bull trend continuation. Gold remains in a relatively tight consolidation range from 2,471 to 2,532, above important support. The range follows a clear bull breakout of a symmetrical triangle pattern on August 16, which was followed by a new record high.

Signs of Strength Remain

Following the bull breakout gold pulled back and successfully tested support around the top trendline of the triangle pattern with last Thursday’s low of 2,494. Further, yesterday’s session saw a new record daily closing high for gold, a sign of strength. Moreover, the rising purple 20-Day MA is about to converge with the top triangle line and further strengthen the potential significance of the top line that now represents potential support. As long as gold stays above the top triangle line and the 20-Day MA it remains bullish with an expectation for eventual new record highs.

Price Range Evident in Weekly Chart

The weekly chart confirms the price range noted above from the daily chart. It also reflects the tight consolidation pattern that has lasted eight days including today. On the weekly chart (not shown) last week’s high of 2,532 and low of 2,471 show the same price range. Although this week is not yet over, it is an inside week so far.

Daily and Higher Time Frames are Bullish

Given the development of an uptrend in both the long-term and short-term time frames, including the past five weeks, gold is expected to eventually head to new record highs. A decisive rise above 2,532 will trigger a continuation of the uptrend and the breakout of the symmetrical triangle. There are a variety of potential initial upside targets beginning with 2,543, 2,566, and a range from 2,595 to 2,605. The higher price level is the target from measuring the symmetrical triangle pattern.

Since gold remains in consolidation it may yet decline to below the 20-Day MA and top triangle line to test support at lower prices. If it does a test of the lower boundary of the triangle is possible. Within the range is potentially significant support represented by the 50-Day MA at 2,414.

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