Gold Price Forecast: Reaches New High, Bullish Momentum Weakens at Resistance

Appreciation in the price of gold continued Thursday as it reached a new record high of 2,686 before encountering resistance that led to an intraday pullback. Gold is at risk of being extended as the rally from the last pullback low of 2,547 reaches its sixth day of higher daily highs and higher daily lows.

Other than yesterday, the prior four days ended in the top third of the day’s trading range. However, today may be a change in that regard as gold is currently trading in the bottom half of the day’s trading range and may end the day there. A daily close in upper half of the range would enhance the bullish thesis.

Reached Potential Resistance Zone

Gold has been trading in a potential resistance zone since Tuesday’s advance reached the targets for two ascending ABCD patterns that mark a potential pivot level (purple, orange) around 2,661. Subsequently, a more recent and smaller (light blue) rising ABCD pattern identified a target at 2,675 and it was hit today. Bullish momentum has since weakened intraday and that opens the possibility of a temporary top.

Drop Below 2,655 Shows Weakness

A drop below today’s low of 2,655 is a sign of weakening that could lead to a deeper pullback. Areas to watch for support on a pullback start with the 38.2% Fibonacci retracement at 2,633. However, a more significant potential support area is around the 50% retracement at 2,616 as it is combined with this week’s low of 2,614.

Of course, a drop below the weekly low is a sign that the sellers are in charge lower prices a possibility. Subsequently, a pullback to test support at the last breakout level of 2,600 would be on the table. That price level is confirmed by the 61.8% Fibonacci retracement, also at 2,600.

Decisive Rally Above 2,686 Points to Higher Prices

Regardless of the potential for a pullback, there are no signs of it yet. Therefore, the rally may continue. A decisive advance above today’s high of 2,686 will signal a potential bullish trend continuation. If the advance is sustained gold has a chance to reach the next higher price zone identified on the chart that begins up at 2,724.

That price level completes the target for a long-term ascending ABCD pattern that begins from the February swing low. There are several potential targets above 2,724, but the one that be more significant since it is derived from a longer period is 2,754. It marks the 250% extended retracement of the decline from the March 2022 peak.

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