Gold Price Forecast: Short-Term Bullish Signs May Not Last

Gold bounced off its recent 2,353 swing low on Tuesday as it reached a four-day high of 2,411. That put the precious metal back above its 20-Day MA, which is currently at 2,398. Moreover, it is on track to close above that price level. Although Tuesday’s session has not ended, trading continues near the highs of the day and above the 20-Day line. This puts gold in a position to complete today at its highest daily closing price in six days. Ending above the four-day high of 2,403 would be a slightly stronger indication than a close below that price level.

Remains in Bearish Correction

Nevertheless, gold remains in a bearish correction. The prior two corrections saw the price of gold fall by 6.7% and 6.3%, respectively. Given that each of those corrections followed a new record high, as does the current one, the current retracement may have further downside to go. The current retracement saw the price of gold fall by only 4.7% so far, less than the prior two. If last week’s low turns out to be the bottom, it would be a strong bullish sign. Buyers could have waited for lower prices, but they did not, reflecting growing demand.

Above 2,432 Needed for Sustained Rally

If the bearish retracement has more downside to go, then the bounce in gold seen this week will likely find resistance and turn back down. This makes the most recent interim swing of 2,432 important. A bearish continuation is possible if gold remains below that swing high. However, if gold breaks out above 2,432, it is signaling that the correction is likely over, and a bottom is set. Under this scenario, the recent swing low would be the lowest possible entry area before a new attempt to break out to new record highs.

Lower Targets Start with 2,332

Lower potential support targets start at 2,332, the completion of a falling ABCD pattern. Both the AB and CD legs of the pattern will match price symmetry at that pivot. Further down is a price area around 2,305. It includes the lower support range of the top consolidation pattern from the past few months and the extended target for the ABCD pattern at 2,305.

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