Gold Price Forecast: Momentum Builds as Gold Surpasses Key Resistance Levels

Gold spiked higher on Tuesday to reach a daily high of 2,695. So far, that is a test of resistance around the internal trendline. However, gold is set to close strong, near the highs of the day, which is where it is currently trading. Before it does it may reach a new high for the day. The advance showed strength as it exceeded potential resistance at the 50-Day MA, now at 2,669, and gold will likely close above that line. Today’s strength followed a bullish reversal of a failed breakdown of a bear flag pattern last Friday.

Follow-through will be a Key Indicator

Follow-through from here will be key. There is upside potential if today’s high is exceeded as it should be gold back above the trendline and further confirm a failure of the bear flag. A top purple parallel line is shown on the chart for the top of the flag. Although a sustained advance above the trendline would indicate strength, a rally above the recent swing high at 2,721 would be needed to trigger a bullish reversal of recent bearish correction.

Bullish Momentum Kicks In

Today’s bullish momentum follows a breakout of an inside week pattern that triggered on a move above 2,657 yesterday. A bullish reversal on the weekly chart would support the possibility that gold can continue to strengthen in the near-term. The 2,721-swing high is a five-week high. It seems likely that if upside momentum is sustained above today’s high, gold has a shot at testing and therefore possibly exceeding that swing high. It is worth noting that today’s advance also exceeded the 2,686-swing high from September. That provides another clue that the buyers are starting to get more aggressive.

Pullback Could Find Support at 50-Day Line

Nevertheless, further consolidation leading to greater market uncertainty could also occur. As noted, additional signs of strength will be needed if gold is to have a chance of reaching the most recent swing high. A pullback from today’s high could see support around the 50-Day MA. How gold behaves around the 50-Day line should provide clues as to strength or weakness. That line can be watched along with the recent minor swing high of 2,666.

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