Gold Price Forecast: Slides Below Key Support as Bearish Signals Intensify

Gold fell sharply on Wednesday following the U.S. Federal Reserves decision to lower interest rates by a quarter point with fewer reductions expected in 2025 than was previously estimated. The decline took gold below the recent interim swing low of 2,605 to a low for the day of 2,587, at the time of this writing. That is a bearish signal that will likely lead to lower prices for gold.

The 2,605-swing low established a higher swing low and set up the potential for a bullish continuation above the 2,721-swing high on November 25. An attempt to break out above the 2,721 level was subsequently attempted on December 12 with a slightly new high of 2,726. Sellers quickly took back control from there however, leading to today’s descent.

Close Below 2,605 Confirms Bearish Signal

A daily close below the 2,605-support level will confirm today’s bearish signal and put gold on track to test lower support levels before the correction is complete. Notice the parallel declining trend channel on the chart. There was an attempted breakout recently above the top channel line, but it failed after a couple days as gold fell back below the line last Friday.

Also, recent attempts to reclaim the 20-Day and 50-Day MAs have failed. Resistance was seen yesterday around the 20-Day line after gold traded above it for six days prior, and the 20-Day line fell below the 50-Day line on November 26, and it has not gotten back above it. These are all bearish signs that now take on greater meaning.

Decline May Test Support Around 2,537 Swing Low

It looks like there is a good chance that the 2,537-swing low will be retested as support and certainly lower prices may be hit as well. In general, once price is rejected on one side of a channel and begins to move in the other direction, an eventual hit of the opposite trendline is possible. The weekly chart held the clue for this drop as today triggered a bearish weekly shooting star candlestick pattern from last week. And it represents a failure of the earlier bull breakout noted above. Failed pattern can lead to sharp moves.

Lower Potential Support Zone Around 2,473

Below 2,537 is a 61.8% Fibonacci retracement level at 2,473 that looks to mark the next lower potential support level for gold. A falling ABCD pattern also completes close to that price level at 2,475. It would also be a good idea to watch for signs of support around the next lower trendlines, which is around the Fibonacci retracement level.

For a look at all of today’s economic events, check out our economic calendar.