Gold Price Forecast: Retains Strength but Remains Rangebound

Gold remained stuck within a relatively tight five-day price range from 2,709 to 2,758 on Friday as it continued to push up against recent highs. Notice that the price range for each of the five days, including today, is contained within the high to low range from Wednesday.

On that day gold crept to a new record high of 2,758 before encountering resistance that turned the price back down. The day ended in a bearish posture with a reversal day that closed below the prior day’s low. Nonetheless, gold has managed to strengthen somewhat the past two days off that low close but remains inside the range and therefore may yet again be impacted by the bearish implications of that day.

Resistance Holds Around 250% Extension

Resistance has been seen around the completion of a 250% extended retracement measuring the March 2022 downswing. Also, the top line of a rising trend channel marks a similar price area. But given the signs of continued strength, it seems like gold may yet want to go higher before a notable pullback. Regardless, a signal is needed before anything is indicated. A bullish signal occurs on a decisive rally above the 2,758-record high.

Breakout Above 2,758 Targets 2,797

If price continues to strengthen from there, gold is likely heading towards a price range from 2,797 to 2,815. The range consists of a 200% extended retracement of the decline that began from the 2011 peak. Next is 2,808, the 261.8% extended retracement from the decline off the March 2022 peak. Finally, the price range ends with an estimated target of 2,815 from the bull flag pattern that triggered last week.

Support Next at 2,686

On the downside, a breakdown below 2,758 may lead to a test of support at lower prices. The last breakout level was at the prior trend high of 2,686 and it may now see support. Subsequently, the critical 20-Day MA for the short-term trend is at 2,674. Notice that the 20-Day line was tested on the initial flag breakout day before the rise above the top flag boundary line. A break below the 20-Day line may see the 50-Day MA at 2,599 eventually being tested as support.

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