Gold Price Forecast: Rallies Toward Record Highs Amid Breakout Potential

Gold continued to move higher on Friday as it rallied to test the record high from late-October at 2,790 before backing off. At the time of this writing the day’s high was 2,786 and trading continues above the prior trend high at 2,762. Nonetheless, the strength or weakness of today’s closing price relative to the day’s trading range should provide a clue as to whether buyers can retain control of the bull trend heading into next week. The low for the day was 2,752 and the halfway mark for the range is 2,769. Otherwise, resistance may continue, leading to a pullback.

Risk of Being Overbought

Keep in mind that gold has been advancing in the current upswing (CD) since the 2,582 (C) swing low. At today’s high gold had advanced by 203.63 points or 7.9% from 2,582. On a percentage basis that gain is slightly above average for five prior sequential upswings that occurred since the beginning of May 2024. Those are measured moves that had gains ranging from 7.08% to 8.65%.

On that basis alone gold may continue to see short-term resistance that leads to a pullback before it clears above the current high. Nonetheless, if a breakout above 2,790 occurs prior to a pullback gold is at risk of losing steam shortly thereafter as upward momentum began to accelerate following the minor interim higher swing low in January and the subsequent reclaim of the 50-Day MA.

Breakout Above 2,790 Targets 2,823

A sustainable rally above 2,790 has a chance of reaching the next higher target that looks to be around the 127.2% extension of the current rising ABCD pattern (purple) at 2,823. The 100% target was hit today at 2,772 and gold plowed right through it. Further up is the 127.2% extended target for a rising ABCD pattern that begins from the February 12 swing low (also part of a small triangle price structure).

That price area can be watched for signs of resistance along with the 2,874 target that completes a 227.2% extension of an advancing ABCD pattern that starts from the September 2022 swing low. Since the higher price level is derived from a larger pattern (covers more time) it has the potential to be more significant.

Bearish Correction Could Test Support at 20-Day MA

If a correction occurs before new record highs, then key near-term support is at the minor swing low of 2,736 from Thursday. A correction to test support around the 20-Day MA is possible while retaining the bullish price structure. Notice that an uptrend line and the 20-Day line have converged and are marking the same price today at 2,682.

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