Gold Price Outlook Remains Bullish Despite Short-term Choppiness

Gold Forecast Video for 12.04.23 by Bruce Powers

Although momentum slowed following gold’s breakout of a bullish pennant trend continuation pattern last week, a retracement to the 23.6% Fibonacci level completed yesterday. Support was seen at a low of 1,982 on Monday, with gold rising today to exceed Monday’s high of 2,007. A bullish outlook remains in the near term for gold if it stays above Monday’s low. However, if it falls to below Monday’s low, the bullish outlook becomes suspect as the pennant breakout shows signs of failure.

Trend Continuation on Monthly Chart

Gold has already triggered a trend continuation on its monthly chart in April. This is bullish behavior and points to further strengthening. Nevertheless, in the near term it is trading within the range of last week and that could continue through to the end of the week. This would provide a choppy trading environment.

Bullish Outlook if Gold Stays Above Monday’s Low

Watch for Tuesday’s high to be exceeded for the next bullish sign. Confirmation of strength occurs on a daily close above the day’s high. The target from the bullish pennant is up at 2,158, providing an eventual target at a new high for gold. Nevertheless, the next target is the 161.8 Fibonacci extension at 2,044, followed by prior resistance at 2,070.

Watch the 20-Day EMA for Trend Support

The 20-Day EMA trend indicator was tested as support on the recent spike down through the bottom of the pennant. It can be used going forward. If gold falls below the 20-Day line, and subsequently closes below it on a daily basis, a deeper retracement is likely in the works. Support levels to watch in this case include the 38.2% Fibonacci retracement at 1,947, the 50% at 1,921, and the 61.8% retracement at 1,894.

Long Term Bullish

Gold tested support of its 200-Day EMA in February and March, before reversing higher to breakout of a bullish double bottom pattern. That was the first successful bounce off a test of the 200-Day line since way back in November 2020. It sets up gold to continue higher long term. The aggressive rally since then is supportive of the bullish case as gold advanced 12.3% off the second bottom in only 20 days.

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