Gold’s Bullish Momentum: Poised for Continuation Breakout

Gold Forecast Video for 18.10.23 by Bruce Powers

Gold further consolidates near its trend high reflecting upward buying pressure. Volatility narrowed today as the day’s high to low range is narrower than yesterday, the first consolidation day following last Friday’s sharp rally. Each of the past two days made a feeble attempt to continue higher with prices briefly exceeding the previous day’s high. So far attempts have been unsuccessful. That could change soon.

Gold Stays Strong as it Consolidates Near Highs

The developing consolidation around the rally highs has gold pushing up against resistance of a downtrend line that defines dynamic resistance of the recent correction. Therefore, a breakout above the current trend high of 1,932 (today’s high) will also trigger a breakout of the trendline. This would further confirm the switch from bears being in control to bulls being in control. Several potential upside targets are marked on the chart. Primary targets following a sustained advance above today’s high includes the area around 1,949 to 1,953 (prior swing high). This price zone is followed by the price area around the next higher swing high from 1,985 to 1,987.

Measured Move Upside Target is 1,993

However, today we’ll look at a target zone based on measured moves. Since the bottom in November 2022, gold has had two previous sharp rapid advances of 10.5% and 11.0%. Other rapid rallies peaked at less than 5%. Therefore, the current rally should have more to go. Specifically, we can anticipate the completion of a 10.5% rally at a minimum. Projecting the current advance to 10.5% provides a target around 1,993. That price level is very close to the higher swing target of 1,987.

Will Gold Make a New Attempt at Record Highs?

If triggered, the current developing setup in gold may be the last chance to buy gold around current prices for some time as the potential for a long-term bullish breakout into new highs may come next. Gold hit a record high of 2,030.60 back in August 2020 before pulling back. A second attempt to sustain new highs was made with the 2,070-swing high in March of 2022. Finally, on May 1 of this year a new record high of 2,082 was reached leading to the recent bearish correction. The fourth attempt may very well be successful and that may be why we’re seeing a sharp pickup in demand currently.

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