Gold Price Forecast: Holds Gains Amid Consolidation, Testing Key Resistance

Gold pulled back on Friday after reaching a swing high at 2,698. Resistance was seen following that high, which occurred after a bull breakout above a trendline and the completion of a 78.6% retracement. Despite Monday’s potential bearish reversal day and a weak close, gold held above Monday’s low of 2,657 on Tuesday and consolidated in a relatively narrow range. The high was 2,675 and the low 2,659, at the time of this writing.

Consolidation Day

Since sellers did not retain control today, there is no follow through to Monday’s selling. Overall, price action remains near the highs of a rising trend and testing resistance around a trendline. Until there is bearish follow through the potential for an upside breakout remains. Although a rise above today’s high may show strength, it may not signal enough demand to take gold higher. That should be clearer on a rise above Monday’s high at 2,698, and further still above the swing high at 2,698.

Above 2,698 Shows Strength

If gold is to make a bull breakout attempt above the 2,698-swing high, then a deeper pullback first may assist in strengthening demand around key support levels. Both the 50-Day MA at 2,645 and the 20-Day MA at 2,637 identify possible support. And, although a decline below the lower 20-Day line would be bearish, that would really depend on what happens next around the small uptrend line. That line also represents possible support levels and can be used as a guide for identifying signs of strength or weakness.

Weekly Bullish Sentiment

Bullish patterns in the weekly chart (not shown) support an eventual resolution to the upside for gold. Last week’s advance triggered a breakout to a four-week high. The week ended strong, with gold ending near the highs of the week’s trading range and at a seven-week weekly closing high. Moreover, last week’s strength followed a successful test of support around the 20-Week MA over several weeks.

It shows strong underlying demand for gold and retention of the rising trend beginning from October 2023. That was when the 20-Week MA was last reclaimed. In general, once price is rejected to the upside from the price zone of the 20-Week MA there is an increased chance for a decisive advance. Similar behavior was seen following the February 2024 swing low and August 2024 swing low, as well as the November swing low.

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