Gold Price Forecast: Support Levels and Potential Upside Continuation

Gold continues to hold above support around the 8-Day MA with a with a three-day low of 2,151. That is the bottom of the price range and key near-term support. The 8-Day line was breached briefly today but it looks like the close will be at or above the line. Therefore, a decline below 2,151 could lead to further selling.

Deeper Retracement Still Possible

If a deeper retracement begins in gold there are several price zones to keep an eye on for possible support. The first being the prior record high at 2,135, followed by the 38.2% Fibonacci retracement at 2,115 and the 50% retracement at 2,090. The lower price zone is enhanced by the 20-Day MA, currently at 2,088, and the swing high from late December around 2,088. Further down is the 61.8% Fibonacci retracement at 2,065, which is confirmed by the swing high from February 1.

Bullish Continuation Scenario

Alternatively, since gold has been holding relatively strong since last week’s new record high of 2,195, an upside continuation remains a possibility before a deeper correction. A decisive breakout above today’s high of 2,177 would provide a bullish signal, with further confirmation provided on a rally above yesterday’s high of 2,180. This doesn’t mean it will keep rising though. It should be watched carefully for further signs confirming the bullish posture.

Nevertheless, the next higher targets comprise two ranges from Fibonacci extensions of prior swings. The first zone is from 2,235 to 2,246 and the second is from 2,277 to 2,298. The top of the second price zone also completes the initial target for a large rising ABCD pattern. That is where there is symmetry in price between the CD leg and the AB leg of the pattern. Once symmetry occurs the chance for a reversal increases.

Multi-Year Breakout in Play

Since there is only one more trading day left to the week it is likely that gold will end with a high inside week. In other words, the full trading range for the week is near the highs of last week. This shows strong demand remaining for gold. Keep in mind that gold closed at a new record high last week as it rose out of a multi-year basing pattern. That likely sets the stage for a multi-month or multi-year advance.

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