Gold Price Forecast: Targeting Rise to 20-Day Moving Average at 2,644

Gold bounced on Friday to reach a high of 2,632. That put it slightly above yesterday’s high of 2,626. And it is on track to close in a strong position, in the top third of the day’s price range. That would put it in a position to test resistance around the 20-Day MA, at 2,644 currently, along with a downtrend line. Since the two lines have recently converged, they represent a potentially more significant pivot level than either alone.

Test of Prior Trend Support as Resistance

Notice that from Monday to Wednesday this week the lines were around resistance at the highs of the day. Therefore, if the bear trigger from Wednesday is to follow-through to the downside, it is possible that gold could see resistance around the 20-Day MA and then turn back down.

Lower target levels below this week’s low begin with the 78.6% retracement at 2,576, not much below this week. However, if lower prices continue the recent swing low at 2,537 may be tested as support. Looking at the developing descending trend channel, it shows an increased risk that the 2,537-price level could be busted to the downside. That would put a price zone around 2,475 to 2,473 as the next target zone below 2,537.

Bearish Persistence Could Lead to 2,575 Eventually

There are several indications pointing to that price zone. A declining ABCD pattern (purple) reaches an initial downside target at 2,475. That is where there is symmetry in price between the two legs down and therefore it could be pivot level. The 61.8% Fibonacci retracement is at 2,473. Further, the price zone was shown as both support and resistance earlier in the year, starting from the July swing high.

Rise Above 2,664 Weekly High Changes Sentiment

Despite the potential for a bearish continuation, the outlook might start to change if there is a rally above this week’s high of 2,664. That would put gold back above the 20-Day MA and trendline. It is interesting to notice that on the weekly chart (not shown) gold fell below the 20-Week MA this week but is on track to close today above it. This means that the 20-Week MA is again showing support, which is bullish on the larger time frame. Nonetheless, price action and patterns will provide clues.

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