Gold Price Technical Analysis: Testing Key Support Levels

Gold Forecast Video for 08.03.23 by Bruce Powers

Gold tested support of its 200-Day EMA last week, with a low of 1,805, following the completion of a 61.8% Fibonacci retracement. Price was subsequently rejected to the upside at the 200-Day line and a four-day rally followed. Consequently, resistance was seen around the 34-Day EMA with a high of 1,858 reached yesterday. Gold turned back down after that. That is the second time recently that gold has been rejected at resistance of the 34-Day line. Therefore, it can do so again. It also is a sign of weakness as price moved below the 34-Day EMA in the beginning of February.

Gold May Test Support of the 200-Day EMA Again

Again today, gold is heading toward potential support of the 200-Day EMA (now at 1,805) as it falls sharply, down 1.7% at the time of this writing. Last week’s trend low is also a monthly low. Combining both the 200-Day line with a monthly low creates a potentially significant support zone from the original 61.8% retracement at 1,814 to the February low of 1,805.

Alternative Scenario if Support Zone Is Broken

There is also a particular price pattern to pay attention to in the near-term. Last month was an outside month, where both the high and low of the month were above and below the prior month, respectively. Also, last week was an outside week of the prior week. Both an outside week and month are indicative of price broadening rather than contracting on a smaller time frame. Therefore, it is possible that this expanding consolidation pattern continues for a little while longer.

If it does, then the next place it may show up is off the current decline. It is an alternative scenario if the support zone noted above is broken to the downside. The first part of a possible second outside week occurred yesterday when we popped above last week’s high by less than $1.00, thereby creating the expansion and top of a potential outside week. If that price behavior continues it is possible that gold could fall below last month/week’s low before finding a bottom and reversing higher and back above the 200-Day line, thereby completing the low of a new outside week.

Support Zones if Key Support Is Broken

Otherwise, gold keeps trending lower into the next support zones. In this case, watch for a 50% retracement of the full uptrend to be reached at 1,787, followed by the 78.6% Fibonacci retracement of the internal uptrend if the price continues to fall.

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