Gold Price Forecast: Rallies to 3-Day High, Eyes Key Resistance Levels

Gold rallied to a three-day high of 2,426 on Thursday and broke out above the 20-Day MA. It continues to show signs of strength as trading remains near the highs of the day. If gold stays strong into the close the day will end above the 20-Day line, which is now at 2,415. Today’s advance follows the successful test of support on Monday at the combination of a lower consolidation trendline, the 50-Day MA and the 61.8% Fibonacci retracement. Whether today’s strength is a precursor to an eventual test of resistance at recent highs, starting with 2,478, remains to be seen as trading has occurred inside Monday’s wide range day.

Looks to be Heading To 2,450

Given the strong move today with a wide range green candlestick pattern, gold looks to be heading towards the 2,450 prior swing high. A little above there is Monday’s high of 2,459. Regardless of short-term strength gold is showing signs of further consolidation near the highs of its rising trend. Although a bullish breakout into new highs may occur, it looks more likely that gold is not done testing support near the lows of consolidation. If correct, this would mean the current advance is likely to encounter resistance and turn back down.

50-Day MA is Key Indicator

The 50-Day MA is currently at 2,369 and it was successfully tested as support on Monday with a low of 2,364. A little below there is a more significant price level given how that swing low fits into the larger price structure. Nevertheless, a drop below 2,369 shows weakening, and more significantly if gold falls below 2,364.

However, there is an initial lower target from a falling ABCD pattern at 2,347, while the lower of the three-month consolidation phase is around 2,312. The 2,312 level is the 127.2% extended target. Since it lines up with the trendline rising from the May 3 swing low, it should be given attention if gold weakens on a move below this week’s low of 2,364.

Evolving Symmetrical Triangle May Dominate Price Action

Having said that, an alternative scenario is the gold continues to consolidate near highs for a while longer. It may continue to test high and low resistance and support as a symmetrical triangle consolidation pattern evolves. Initial signs of the pattern are present now, but boundary lines are left of the chart for now.

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