Gold Price Forecast: Monthly Breakout Eyes Higher Prices

Gold strengthened on Tuesday as it broke out above the 2,726-swing high from December 12 and advanced to a high of 2,746 before stalling. The advance triggered a bullish trend reversal as the December lower swing high was exceeded. Also, gold is on track to end today’s session above that price, at the time of this writing.

If it does so, that will be a stronger close than a close below 2,726. In addition, gold looks likely to end the day strong, in the top third of the day’s price range. Either way, today’s bullish price action sets the stage for gold to challenge the record high of 2,790 that was hit at the end of October. In addition to a swing high breakout, the 78.6% retracement at 2,734 was also breached during today’s rally.

Heading Towards 2,772

The next higher target from chart analysis looks to be around 2,772. That is the initial target from a rising ABCD pattern (purple). At that price the two upswings in the pattern would match and generate a potential pivot. A pullback could follow or a breakout through that price zone if buyers remain in charge. Notice the acceleration in momentum as the angle of ascent for the near-term uptrend increases, along with today’s wide range green candle.

This reflects improving demand that may continue to improve. That could lead to an acceleration in the advance as market participants jump on board following the bullish reversal signal above a prior swing high.

Above Record High Points to 2,846

If gold can get above and stay above the record high of 2,790, it heads towards a target zone at 2,846, which is the 127.2% extended target for a rising ABCD pattern beginning from the February 2024 swing low of 1,984. It is quickly followed by the 227.2% extended target at 2,874 for a rising ABCD pattern that began from September 2022 low. It is also worth watching the rising trendline connecting the August swing low. In junction with other indicators, it can help provide guidance if approached.

Monthly Bullish Reversal Triggered

Finally, today’s bull breakout triggered a monthly reversal as last month’s high of 2,726 was exceeded. December was an inside month. Since the longer time frame takes precedence, a bull trend continuation signal was generated today, which increases the chance of gold reaching new record highs.

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