Gold Price Forecast: Near-Term Bullish Outlook Hinges on Key Support Levels

Gold rallied to reclaim the 2,721-price level on Thursday before reaching a high for the day and a higher swing high of 2,726. Sellers subsequently took back control from there leading to a selloff to a low for the day of 2,675. The low essentially successfully tested support around the 50-Day MA and a downtrend line.

At the time of this writing gold is on track to close weak, in the lower half of the day’s trading range and below the lower line of a rising parallel channel. That line was reclaimed yesterday, with a daily close above it for the first time since the prior interim swing high from November (B).

Bullish Evidence Building

Given the characteristics of the advance from the recent higher swing low of 2,605 (C) and including the daily close above lower rising channel line yesterday, gold is in position to decisively break out above the November swing high and potentially challenge the recent record high of 2,790.

Moreover, a weekly bullish signal triggered this week, and it will confirm on a close this week above last week’s high of 2,657. Although today’s advance triggered a higher swing high, it needs to confirm with a daily close above the high. So far, it does not look like that is likely to happen by the end of today.

Key Term Support at 50-Day MA

Support around the 50-Day MA is a key near-term indicator to watch. If support continues to be found at or above the 50-Day line, the near-term outlook remains bullish. Nonetheless, a sign of strength would be needed with an advance above today’s high of 2,726 to indicate a bullish continuation. If, however, gold drops below the 50-Day line and stays there, the price area around the crossing of a rising and falling trendlines at 2,654, can be watched for potential support. Also, consider the 20-Day MA, which is close by the crossing lines at 2,649.

Rebound from Healthy 9.1% Correction

Finally, the recent correction to a low of 2,537 saw the price of gold decline by as much as 253 points or 9.1%. That is the largest correction since a 13% decline occurred following the May 2023 peak. Therefore, when combined with recent bullish technical evidence that shows improving demand and a strengthening trend, gold is showing it is likely to go higher. How it goes about getting there, including how long it takes, is a question.

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